CIHM 
Microfiche 


(IMonographs) 


ICIMH 

Collection  de 
microfiches 
(monographies) 


Canadian  Instituta  for  Historical  Microraproductions  /  Institut  Canadian  da  mirroraproductions  historiquas 


Technical  and  Bibliographic  Notes  /  Notes  techniques  et  bibliographiques 


The  Institute  has  attempted  to  obtain  the  t>est  original 
copy  available  for  filming.  Features  of  this  copy  which 
may  be  bibliographically  unique,  which  may  alter  any  of 
the  images  in  the  reproduction,  or  which  may 
significantly  change  the  usual  method  of  filming  are 
checked  below. 

0  Coloured  covers  / 
Couverture  de  couleur 


D 
D 


D 
D 

D 

n 


D 


D 


Covers  damaged  / 
Couverture  endommagte 

Covers  restored  and/or  laminated  / 
Couverture  restaur^  et/ou  pellicul^e 

Cover  title  missing  /  Le  titre  de  couverture  manque 

Coloured  maps  /  Cartes  gdographiques  en  couleur 

Coloured  ink  (i.e.  other  than  blue  or  black)  / 
Encre  de  couleur  (i.e.  autre  que  bleue  ou  noire) 

Coloured  plates  and/or  illustrations  / 
Planches  et/ou  illustrations  en  couleur 

Bound  with  other  material  / 
Relid  avec  d'autres  documents 

Only  edition  available  / 
Seule  Edition  disponible 

Tight  binding  may  cause  shadows  or  distortion  along 
interior  margin  /  La  reliure  serr^e  peut  causer  de 
I'ombre  ou  de  la  distorsion  le  long  de  la  marge 
intdrieure. 

Blank  leaves  added  during  restorations  may  appear 
within  the  text.  Whenever  possible,  these  have  been 
omitted  from  filming  /  Use  peut  que  certaines  pages 
blanches  ajoutdes  lors  d'une  restauration 
apparaissent  dans  le  texte,  mais,  lorsque  cela  6tait 
possible,  ces  pages  n'ont  pas  6\6  f  ilm^es. 

Additional  comments  / 
Commentaires  suppl6mentaires: 


L'Institut  a  microfilm^  le  meilleur  exemplaire  qu'il  lui  a 
6t6  possible  de  se  procurer.  Les  details  de  cet  exem- 
plaire qui  sont  peut-dtre  uniques  Ju  point  de  vue  bibli- 
ographique,  qui  peuvent  modifier  une  image  reproduite, 
ou  qui  peuvent  exiger  une  modifk^tion  dans  ij  metho- 
ds nomnale  de  filmage  sont  indiqute  ci-dessous. 

I     I  Coloured  pages  /  Pages  de  couleur 

I I   Pages  damaged  /  Pages  endomrrwgdes 


n 


Pages  restored  and/or  laminated  / 
Pages  restaurdes  et/ou  pellicul^es 


r~V  Pages  discoloured,  stained  or  foxed  / 
LJlI   Pages  dteolordes,  tachet6es  ou  piques 

I     I   Pages  detached  /  Pages  d^tach^es 

I  ^  Showthrough  /  Transparence 

I      I   Quality  of  print  varies  / 


D 
D 


D 


Quality  in^gale  de  I'impression 

Includes  supplementary  material  / 
Comprend  du  mat^nel  suppldmentaire 

Pages  wholly  or  partially  obscured  by  errata  slips, 
tissues,  etc.,  have  been  ref limed  to  ensure  the  best 
possible  image  /  Les  pages  totalement  ou 
partiellement  obscurcies  par  un  feuillet  d'enata,  une 
pelure,  etc.,  ont  616  film^s  ^  nouveau  de  fa^on  h 
obtenir  la  meilleure  image  possible. 

Opposing  pages  with  varying  colouration  or 
discotourations  are  filmed  twice  to  ensure  the  best 
possible  image  /  Les  pages  s'opposant  ayant  des 
colorations  variables  ou  des  decolorations  sont 
filmdes  deux  fois  afin  d'obtenir  la  meilleure  image 
possible. 


This  ttam  is  filimd  at  th*  raduction  ratio  chcciwd  bsiow  / 

Ce  document  ost  fHm*  ui  tmix  do  rMuetion  Indiqui  ci-doo«ou«. 


lOx 

1«l 

18x 

22x 

Mk 

30x 

y 

12x 


16x 


20x 


24x 


28x 


32x 


Th«  copy  ftlmtd  h«r«  hai  b—n  raproducad  thanks 
to  tna  sanareaity  of: 

National  Library  ot  Canada 

Tha  mm9-  •PP«»"'»8  "•'•  •'•  »»»•  *»•!*.  *»"!'"^ 
potsibia  conaidaring  tha  condaion  and  toflibiHtv 
of  tha  oneinal  copy  and  in  k««pina  with  tha 
filmins  conuoot  apacilication*. 

Oneinal  copia.  in  printad  papar  cowara  ara  fllmad 
baginnina  with  tha  from  covar  and  anding  on 
tha  laat  paga  with  a  pnntad  or  illu.traiad  •"»•»'••- 
sion.  or  tha  bach  covar  whan  ■P?"»P"f  *••  jf ", . . 
othar  original  copiaa  ara  filmad  baginnmg  on  tha 
f  irat  paga  with  a  printad  or  illuatratad  Impraa- 
aion   and  anding  on  tha  last  paga  with  a  printad 
or  illuatratad  impraaaion. 


Tha  laat  racordad  frama  on  aach  "»'e'oficha 
•hall  contain  tha  .ymool  -^  ""••'""•  cSn-^.* 
TINUED").  or  tha  symbol  V  (moaning    6NU  i. 
whichavar  appiiaa. 

Maoa.  olataa.  chana.  ate.  may  ba  filmad  at 
S;y;;nt  raduction  ratio..  Thoaa  too  larga  to  ba 
antiraly  includad  in  ona  a«po.ura  ara  filmod 
Oaginning  in  tha  uppar  laft  hand  cornar.  laft  to 

right  and  top  to  bottom,  at  "'•"^  .♦'••"••  ^.h. 
raquirad.  Tha  following  diagrams  illuatrata  tha 

mathod: 


L'axsmplaira  film*  fut  rapreduit  grace  A  la 
g*n4rotit*  da: 

Bibliothaqua  nationale  du  Canad* 


Laa  imagaa  auivantaa  ent  Ota  raproduitas  avac  la 
plus  grand  sein,  compta  tanu  da  la  condition  at 
da  la  nattat*  da  I'aiiamplaira  films,  at  tn 
eonformita  avac  laa  conditions  du  contrat  da 
fUmaga. 

Laa  axamplairaa  originaux  dont  la  couvartura  an 
papiar  ast  imprimOa  sont  filmOs  an  commancant 
par  la  pramiar  plat  at  an  tarminant  soit  par  la 
darniOra  paga  qui  comporta  una  ampramta 
d'imprassien  eu  d'illustrstion.  soit  par  la  sacond 
plat,  salon  la  cas.  Toua  las  autras  axampiairas 
originaux  sont  filmOs  on  commancant  par  la 
pramiOra  paga  qui  comporta  una  amprainta 
d'impraasion  ou  d'illustration  at  tn  tarminant  par 
la  darm*ra  paga  qui  comporta  una  talia 
amprainta. 

Un  daa  symbelas  suivants  spparaitra  sur  la 
darniOra  imaga  da  ehaqua  microfiche,  salon  la 
caa:  la  symbolo  -»  signifia  "A  SUIVRE".  la 
symbols  ▼  signifia  "FIN". 

Las  cartas,  planchas.  tableaux,  ate.  pauvant  atra 
film«a  A  daa  mux  da  reduction  diff Srents. 
Lorsque  le  document  est  trop  grand  pour  otre 
reproduit  en  un  soul  ellch*.  il  est  films  S  partir 
da  I'angle  supdrisur  gaucha.  da  geuche  S  aroiie. 
at  da  haut  en  bes.  sn  prenant  le  nombre 
d'imeges  n*cessaire.  Los  diegrammes  suivants 
illustront  le  mOthode. 


6 


fMooam  nsowTioN  tut  chart 

(ANSI  ond  ISO  TEST  CHART  No.  2) 


1^ 

iSi 

1^ 

|M 

■  2.2 

Hi 

|3^ 

Mam 

L£    1 

12.0 

A 


I    ^^PPUEDJM^OE    Inc 

1653  Eait   Ugin  Street 
("6)  2M-  5989 -To. 


?' 


in 


Carnegie  Endowment  tor  Internatic    j  Peace 


DIVISION  OF  ECONOMICS  AND  HISTORY 
HWN  MTEt  CURK,  DiKtCTOII 


i 


PRELIMINARY  ECONOMIC  STUDIES  OF  THE  WAR 


EDITED  BY 

DAVID   KINLEV 
Prelnwr  of  Poliile.l  Economy.  Unlvoreity  of  miMlt 
Mrabor  ol  CommiiiM  of  Rmirch  oi  ih«  Eodowmni 

No.    17 


EARLY  EFFECTS  OF  THE  WAR  UPON 

THE  FINANCE.  COMMERCE  AND 

INDUSTRY  OF  PERU 


•Y 


L.  S.  ROWE.  Ph.D..  LL.D. 

Profeuor  of  Political  Science 
Univenity  of  Penniytvania 


NEW  YORK 

OXFORD  UNIVERSITY  PRESS 

AMERICAN  BRANCH:  3S  W«t  32ko  Street 
LONDON.  TORONTO.  MELBOURNE.  AND  BOMBAY 
1920 


COPYRIGHT  ilK 

IV  TBI 

CARNEGIE  ENDOWMENT  FOR  INTERNATIONAL  PEACE 
<  JncKioR  Placi.  H'AiaiNeTON,  D.  C. 


4 


EDITOR'S  PREFACE 

The  purpose  of  thii  itudy  is  to  present  in  succinct  form  the 
effect  of  the  outbreak  of  the  World  War  on  the  commerce,  in- 
dustry and  finances  of  Peru.  The  material  was  collected  by 
Dr.  Rowe  in  the  course  of  a  \  lie  'o  the  country  in  11H.1,  and 
the  manuscript  was  submitted  soon  after  his  return.  The  pub- 
lication has  been  unavoidably  delayed,  but  inasmuch  as  it  pre- 
sents a  matter  of  enduring  interest  this  delay  is  not  of  serious 
moment. 

The  facts  presented  show  the  far-reaching  effect  of  the  war 
in  Europe  on  the  life  of  a  people  far  removed  from  the  theater 
of  the  conflict  and  which  at  the  time  maintained  a  strictly  neutral 
position,  although  subsequently  diplomatic  relations  with  the 
Central  Powers  were  severed.  Conditions  in  Peru,  as  set  forth 
in  this  monograph,  illustrate  the  close  interdependence  of  na- 
tional interests  and  the  deep  and  vital  concern  of  every  nation  in 
the  maintenance  of  world  peace. 

David  Kinley,  Editor. 


CONTENTS 

I  Conditions  Preceding  the  War 3 

II  Government  Finances  Preceding  the  War 8 

III  Financial  System  and  Effect  of  the  War  Thereon  . .  12 

IV  Commercial  and  Industi?!  Situation  Created  by  the 

War 24 

V  Effect  of  the  War  on  Wages  and  Labor  Conditions  38 

VI  Effect  of  the  War  on  International  Trade 43 

Appendices   51 


EARLY  EFFECTS  OF  THE  WAR  UPON 
THE  FINANCE,  COMMERCE  AND 
INDUSTRY  OF  PERU 


CHAPTER  I 
Conditions  Preceding  the  War 

The  economic  and  financial  condition  of  Peru  during  the  year 
immediately  preceding  the  war  was  far  from  satisfactory.  Com- 
mercial and  industrial  depression,  due  to  the  low  price  of  sugar, 
rubber,  cotton  and  copper — the  staple  products  of  Peru — to- 
gether with  the  political  disturbances  which  occurred  during  the 
early  part  of  1914,  had  created  conditions  which  not  only  threat- 
ened the  leading  industries,  but  also  placed  a  severe  strain  on 
the  financial  system  of  the  country. 

Of  Peru's  agricultural  products,  the  most  important  is  sugar. 
The  declining  prices  of  the  year  1913  placed  this  basic  industry 
in  a  most  unfavorable  condition.  In  1911  Peru  produced  178,- 
533  metric  tons  of  raw  sugar;  in  1912  the  output  was  increased 
to  192,754  metric  tons,^  whereas  the  acreage  under  cultivation 
increased  from  86,880  acres  to  91,750  acres  and  the  persons 
employed  from  16,977  to  19,945.'  During  the  same  period  the 
number  of  plantations  increased  from  65  to  81  and  the  number 
of  sugar  mills  from  32  to  38.  In  1912  the  producers  received 
for  their  output  $4.08  per  English  hundredweight  of  112  pounds 
of  granulated  sugar  of  96  per  cent  polarization.'  In  1913  the 
price  dropped  to  $2.80  per  hundredweight,  and  even  reached  the 
low  figure  of  $2.39.  Exportation  to  the  United  States  suflfered 
a  severe  decline,  dropping  from  362,671  tons  in  1912  to  259,982 
in  1913. 

Note:  The  author  desires  to  acknowledge  his  deep  obligation  to  the 
Peruvian  Government  as  well  as  to  the  American  Minister  in  Lima,  and  the 
American  Consuls  in  Callao,  Salaverry  and  Paita,  and  to  the  Chief  of 
the  Bureau  of  Foreign  and  Domestic  Commerce  of  the  Department  of  Com- 
merce, for  data  and  assistance. 

*  Metric  ton  is  equal  to  2,204.6  pounds. 

-  Includes  the  pasture  lands  belonging  to  plantations. 

3  Report  of  Consul  General  Handley,  Callao,  Peru. 

3 


4  THE  EARLY  EFFECTS  OF  THE   WAR   UPON    PERU 

During  the  same  period  the  unfavorable  condition  of  the 
rubber  industry  served  to  accentuate  the  commercial  depression. 
It  has  been  evident  for  some  time  past  that  the  cultivated  rubber 
of  the  Far  East  will  soon  become  a  menace  to  the  South  Ameri- 
can product  unless  the  careful  scientific  methods  observed  in 
the  East  are  adopted  in  South  America.  The  declining  prices 
resulted  in  the  bankruptcy  of  a  number  of  important  companies, 
and  reduced  the  total  export  of  rubber  to  $3,957,591  in  1913, 
as  compared  with  $6,343,925  in  1912. 

Cotton  is  second  in  importance  among  the  agricultural  prod- 
ucts of  Peru.  A  number  of  varieties  are  grown,  the  most  im- 
portant of  which,  constituting  about  sixty-five  per  cent  of  the 
total,  is  what  is  known  as  the  "  American  upland."  But  a  small 
quantity  of  the  finer  grade,  known  as  "  sea  island  "  and  "  mita- 
fifi,"  is  grown,  representing  about  two  per  cent  of  the  total. 
Most  of  this  is  grown  in  the  valley  of  the  river  Supe.  The  re- 
maining thirty-three  per  cent  is  a  product  peculiar  to  Peru, 
known  as  Peruvian  "  full  rough  "  and  "  moderate  rough,"  with 
a  long  crinkly  fiber,  which  is  used  to  mix  with  wool  for  the 
cheaper  woolen  fabrics. 

Fortunately  for  the  country,  cotton  was  more  favorably  situ- 
ated in  1913  than  in  1912.  P.icrs  both  for  the  "  semi-rough  " 
variety  and  the  soft  "  Egipto  "  were  higher  in  1913  than  in  1912, 
and  production  increased  nearly  fifty  per  cent,  as  will  be  seen 
from  the  accompanying  table: 

Year  Cotton  Produced 

lbs. 

1909   38,017,650 

1910  33,029,105 

1911    38,389.535 

1912   37,565,130 

1913   52,344,640 

In  1913  the  export  of  cotton  to  the  United  States  increased 
nearly  thirty-three  per  cent,  as  compared  with  1912;  reaching  a 
total  of  $1,224,508. 

As  regard"  copper,  the  leading  mineral  product  of  the  country, 
the  situation  in  1913  was  fairly  satisfactory,  although  the  in- 


CONDITIONS  PRECEDING  THE  WAR  5 

dustry  was  by  no  means  in  a  highly  prosperous  condition.  Nev- 
ertheless, although  the  total  output  of  1013  was  very  little  in 
excess  of  that  of  1912  (27,940  in  1913.  as  compared  with 
27,813  in  1912)  the  market  conditions  were  more  favorable. 
Since  1905  copper  has  gradually  assumed  a  position  of  leader- 
ship in  the  mineral  output  of  Peru.  Up  to  that  time  silver  had 
been  the  leading  mineral  product.  The  discovery  of  economical 
processes  for  the  utilization  of  relatively  low  grade  ores  has 
given  a  tremendous  impetus  to  copper  mining  throughout  South 
America,  but  particularly  in  Peru.  Two  large  American  com- 
panies are  at  present  operating,  one  at  Cerro  de  Pasco,  extract- 
ing from  20,000  to  30,000  tons  of  ore  per  month  and  producing 
copper  in  bars  to  the  extent  of  about  45,000,000  pounds  a  year. 
The  other  company  has  its  plants  at  Morococha  and  Casa  Palco. 
As  will  be  seen  from  the  accompanying  lable,  the  mineral 
output  of  Peru  other  than  copper  is  comparatively  small. 


MINERAL  EXPORTS  OF  PERU  (1912) 

Minerals                                                           Pounds  Value 

Copper,  small   489,867  $10,812 

Copper  and  silver  44.126.3S9  8,889.187 

Lead  and  silver  376.084  96.290 

Silver  8.S03  82.826 

Bismuth    609,666  44.944 

Blocks,  copper   63.493  lO.lSO 

Borate  of  lime    3.2S1.9S0  64.793 

Cement,  copper    187,347  12.128 

Coal 3.606.603  21,732 

Matte  * 

Argentiferous  copper  23,049,013  2,231,764 

Lead    .   473.332  23.920 

Leaden    769.997  51.272 

'^CoDoer    3.930.313  100.674 

Copper  and  lead   5.077.929  106.079 

Gold,  silver  and  copper  116.697  22,147 

Lead    6.149.530  138.257 

Lead  and  silver 11.212.527  744.899 

Silver    1,849,658  165,251 

Silver  and  copper  12,592.779  841.566 

Silver,  copper,  lead  10,022  3.942 

Silver  and  gold   82,512  17.298 

Tungsten    .   372,034  69,989 

Residue,  mineral   5,004,275  64,320 

Salt   ..! 7,729,426  37,523 


6  THE  EARLY  EFFECTS  OF  THE  WAR  UPON  PE«U 

MINERAL  EXPORTS  OF  PERU  (1912) 

Silver,  ipongy  3,003  22,535 

Suh>nide5 : 

Copper  and  lilver  8,960  27,921 

Gold,  copper,  »ilver 2,295  7,846 

,  Sliver    152,697  1,078,500 

Vanadium    6,721,210  742233 

AU  other   234,919  14,852 

Total    138,263,000  $15,745,650 

The  total  value  of  the  mineral  exports  in  1912  was  $15,745,- 
650  Of  this  amount  $12,093,500  went  to  the  United  States. 
In  1913  the  total  mineral  exports  advanced  to  $18,519,450  with 
the  same  proportion  going  to  the  United  States.  The  export  of 
copper  alone  to  the  United  States  in  1913  was  $8,188,791;  of 
silver,  :p4,039,764. 

The  other  important  articles  of  production  that  must  be  taken 
mto  consideration  in  any  review  of  the  economic  situation  are 
coca,  petroleum,  wool  and  rice. 

The  coca  leaf,  from  which  cocaine  is  extracted,  is  used  in  part 
in  local  consumption,  although  the  greater  part  is  exported  for 
the  purpose  of  extracting  the  drug.  The  native  Indians  are 
addicted  to  the  chewing  of  the  coca  leaf,  which  seems  to  deaden 
the  nerves  of  the  stomach,  enabling  them  to  get  along  with 
comparatively  little  food.  The  value  of  the  total  production 
of  coca  leaf  in  1913  amounted  to  $5,236,000. 

The  exploitation  of  the  petroleum  resources  of  the  country 
is  still  in  its  initial  stages,  although  a  number  of  companies 
have  been  operating  in  the  northern  departments  of  Peru  for 
several  years,  in  fact  as  far  back  as  1862.  The  total  production 
during  the  year  1913  was  $4,429,770.  In  1913  and  1914  the 
most  important  properties  were  taken  over  by  the  Standard  Oil 
Company,  and  a  thorough  reorganization  of  the  methods  of 
exploitation  is  being  undertaken.  Everything  indicates  that  the 
petroleum  industry  soon  will  'e  one  of  the  most  important  of 
the  country,  and  will  contribute,  in  no  small  measure,  toward 
counteracting  the  unfavorable  economic  conditions  that  have  pre- 
vailed during  the  last  few  years.     Another  product  of  some 


CONDITIONS  PRECEDING  THE  WAR  7 

importance  is  wool,  of  which  the  production  in  1913  was  a 
little  over  three  and  a  half  million  dollars.  The  greater  por- 
tion of  this,  viz.,  $3,162,280,  was  exported.  The  rice  crop, 
amounting  to  $2,127,000  in  1913,  is  consumed  locally;  in  fact 
Peru  does  not  produce  sufficient  for  home  consumption  and  is 
compelled  to  import  consideraWe  quantities  each  year. 

The  other  products  of  the  country  are  of  comparatively  little 
importance,  and  may  be  briefly  summarized  by  citing  the  total 
production  in  1913: 

Grapes    $1,555,000 

Coffee   849,000 

Tobacco   428,000 

Cocoa   100,000 


CHAPTER  II 
Government  Finances  Preceding  the  War 

In  order  to  understand  the  financial  condition  of  Peru,  it  is 
necessary  to  recall  the  disastrous  influence  of  the  war  of  1879, 
wl)ich  left  the  country  prostrate  and  from  which  full  recovery 
has  never  been  effected.  The  dire  straits  to  which  the  govern- 
ment was  reduced  are  fully  reflected  in  the  financial  history  of 
the  period.  With  an  empty  treasury  the  government  found  it 
impossible  to  pay  the  arrears  due  the  army,  as  well  as  other 
obligations  due  her  citizens  arising  out  of  the  war.  To  meet 
this  emergency  the  government  issued  what  are  known  as  "  con- 
solidated notes  "  to  the  amount  of  $13,303,225,  bearing  one  per 
cent  interest.  As  these  were  insufficient  to  meet  the  obligations 
recourse  w  as  then  had  to  what  are  known  as  "  redeemable  bonds," 
bearing  no  interest,  with  a  yearly  amortization  quota  of 
$125,000.  Of  these  $5,671,050  were  issued.  The  "  consolidated 
notes  "  together  with  the  noninterest  bearing  redeemable  bonds 
constitute  what  is  known  as  the  "  deuda  interna  "  or  "  internal 
debt  of  Peru."  The  consolidated  notes  are  quoted  on  the  stock 
exchange  at  about  IV/i  per  cent  of  par,  and  the  redeemable 
bonds  at  ten  per  cent  of  par.  In  July.  1!)14,  there  remained 
outstanding  $13,303,225  of  the  notes  and  $4,269,300  of  the 
bonds. 

The  "  deuda  externa,"  or  funded  foreign  debt  of  Peru,  has 
had  a  most  interesting  history,  and  is  intimately  related  with 
the  formation  of  what  is  known  as  the  "  Peruvian  Corporation." 

In  1869,  1870  and  1872  Peru  floated  a  series  of  loans  in 
England  amounting  to  $158,864,225.  Soon  after  the  war  with 
Chile  the  desperate  condition  of  the  national  finances  made  it 
impossible  to  pay  the  interest  on  the  bonds.  By  1890  the  in- 
debtedness to  foreign  bondholders,  namely,  British,  French  and 

8 


GOVERNMENT  FINANCES  PRECEDING  THE  WA«  • 

Dutch,  amounted  to  $268,316,386.38.  In  view  of  the  prolonged 
default  the  bondholders  began  to  bestir  themselves  in  o  der  to 
save  their  holdings  from  complete  destruction.  After  prolonged 
negotiation  an  arrangement  was  entered  into  with  the  Peruvian 
Government,  under  which  the  bondholders  constituted  themselves 
a  company  known  as  the  "  Peruvian  Corporation."  In  consid- 
eration of  certain  privileges  and  concessions  granted  to  the  cor- 
poration the  foreign  debt  was  canceled.  These  privileges  and 
concessions  included : 

First — The  cession  to  the  corporation  of  all  the  Peruvian 
state  railways  for  a  period  of  sixty-six  years.  These  railways 
included  the  lines  operating 

Between  Mollendo  and  Arequipa 
"         Arequipa  and  Putio 
"        Juliaca  and  Santa  Rosa 
"        Pisco  and  lea 

Callao  and  Chicla 
"         Lima  and  Ancon 

Chimbote  and  Sucheman 
"         Pacasmayo  and  Yoman  and  Guadalupe 
"        Salaverry  and  Trujillo  and  Ascope 
"         Paita  and  Piura 


Second — The  right  to  extract  and  dispose  of  two  million 
tons  of  guano  from  certain  guano  islands  off  the  coast  of  Peru. 
In  the  original  contract  of  1890  the  amount  was  fixed  at  three 
million  tons,  but  was  reduced  to  two  millions  because  of  the 
failure  of  the  corporation  to  build  certain  railway  extensions. 

Third — The  right  of  free  navigation  on  Lake  Titicaca.  and 
the  obligation  to  take  over  the  government  steamers  then  plying. 

The  contract  of  1890  gave  rise  to  endless  differences  which 
finally  led  to  a  revision  of  the  same  in  1907.  In  this  contract 
the  attempt  was  made  to  simplify  the  obligations  of  both  parties, 
as  well  as  to  make  clear  the  points  hitherto  in  doubt.  This 
attempt  has  not  been  successful  and  the  differences  between  the 
government  and  the  corporation  have  been  growing  with  each 


10 


THE   EARLY    EFFKCTS  UK   THE   WAR   UPON    PERU 


year.  The  most  important  change  in  the  new  contract  is  the 
obligation  on  the  part  of  the  Peruvian  Government  to  pay  to 
the  corpf)ration  annually,  for  a  i»criiMl  of  thirty  years,  "  the  sum 
of  £80,000  in  monthly  instalments,  as  from  July.  1!>()7.  while 
the  corporation  undertakes  the  continuation  of  the  Central  Rail- 
way to  Huancayo,  of  the  Southern  Railway  to  Cuzco  and  of  the 
Pacasmayo  Railway  to  Chilete."  In  addition  the  corporation 
lease  of  the  state  railways  was  extended  for  seventeen  years, 
"  during  which  jwriod  the  government  will  receive  fifty  [)cr  cent 
of  the  et  receipts  (the  service  of  railway  obligations  up  to 
£•1,000,000  being  deducted)  and  the  taxation  of  the  corporation 
railways  fixed  for  thirty  years." 

The  franchises  granted  to  the  corporation  have  not  enabled 
it  to  pay  any  dividends  on  its  common  stock.  The  total  cap- 
italization of  the  company  is  £21,900.000.  of  which  £.'>,40(),00(» 
represents  six  per  cent  first  mortgage  bends,  £7,:>()0,000 
four  per  cent  cumulative  preferred  stock  and  £i>,000,000 
common  stock.  The  interest  on  the  bonds  has  been  paid 
regidarly  and  the  dividend  on  the  preferred  stock  has  ranged 
from  lyi  per  cent  in  1903-1904  to  23-^  per  cent  for  the  fiscal 
year  ending  June  30,  1914.  The  conditions  which  made  neces- 
sary the  arrangement  with  the  Peruvian  Corporation  resulted 
in  an  almost  total  eclipse  of  Peruvian  credit,  and  it  was  not 
until  within  comparatively  recent  years  that  the  government 
again  found  it  possible  to  borrow  money  in  Europe. 

The  desire  of  the  Peruvian  Government  to  strengthen  its 
navy  led  to  an  arrangement  with  the  Deutsche  Bank  in  Berlin 
under  wakii  the  necessary  funds  were  advanced  for  the  pur- 
chase of  two  small  cn.isers.  For  the  payment  of  interest  and 
liquidation  of  this  loa.i,  the  government  pledged  the  net  returns 
of  the  national  salt  monopoly,  which  was  administered  by  a 
corporation  organized  for  this  purpose — La  Compafiia  Salinera 
del  Peru.  In  1910  the  amount  owing  the  Deutsche  Bank  together 
with  certain  additional  oliligations  into  which  the  government 
had  entered  were  paid  through  a  loan  secured  from  two  French 
banks.    The  amount  of  the  loan  was  £1.200,000  at  5J,4  per  cent. 


COVEINMENT   FINANCES   PRECEniNG  TIIK   WAR 


11 


^'  1011  this  loan  was  converted  into  funded  obligations  by  an 
Mnglish  banking  house. 

In  VJ12  the  obligations  entered  into  liy  the  governniint  were 
■uch  that  it  again  became  necessary  to  bf)rrow  money.  Recourse 
was  had  to  the  Compania  Kecamlailora  dc  Impuestos.'  which 
loaned  to  the  government  £l.2»r),0(K)  at  seven  per  cent.  Later 
in  the  same  year  n  group  of  local  banks,  the  Mancos  del  Peru  y 
Li.ndres.  .Meman.  Popular  and  Internacional  a<Ivanced  £•;«», sou. 
In  October.  UM.'l,  a  further  loan  of  fi'OO.Ooo  was  secured  in 
Europe,  and  this  was  followed  in  Jul  MM  4.  by  a  second  loan 
for  a  similar  amount.  In  Octolwr.  1!»14,  the  government  sccurni 
from  the  five  leading  banks  in  Lima  a  further  loan  of  £.-.(»o,()uu 
in  return  for  the  privilege  of  issuing  "circular  checks."  a  form 
of  paper  money  issued  under  authority  of  the  laws  of  August  22 
and  October  1,  11U4.-  Since  October  1,  1!»14.  the  government 
finances  have  been  in  an  unsatisfactory  condition,  owing  to  the 
rapid  decline  in  customs  revenues  consequent  on  the  European 
war.  In  fact,  during  the  period  from  January  1  to  July  ai,  1!;!.';, 
the  gover'-ment  has  attempted  to  bo.row  small  s.ims  in  various 
quarters.  Although  the  amounts  have  been  small  their  total  is 
sufficient  to  mal:e  't  impossible  to  state  with  accuracy  the  precise 
total  ot  the  indebtedness  of  the  country. 

It  is  evident  from  the  foregoing  rt  view  that  the  national  debt 
of  Peru  is  relatively  small.  The  available  data  bring  the  total 
to  $22,039,128.  This  would  seem  to  be  a  comparatively  small 
amount  for  a  country  of  such  varied  resources,  but,  as  we  shall 
have  occasion  to  see,  it  represents  a  real  burden  owing  to  the 
mortgaging  of  so  considerable  a  portion  of  the  government's 
assets  to  the  Peruvian  Corporation,  and  to  the  further  circum- 
stance that  each  of  the  more  recent  loans  has  involved  the  further 
mortgaging  of  national  resources.  A  review  of  the  financial 
system  of  the  country,  together  with  a  discussion  of  the  effects 
of  the  European  war  thereon,  will  fully  explain  this  situation. 


*  For  description  of  this  company,  see  page  12. 

»  For  furthei  description  of  these  notes,  see  page  25. 


CHAPTER  III 
Financial  System  and  Effect  of  the  War  Thereon 

The  fiscal  system  of  Peru  rests  on  the  customs  revenues,  on 
certain  internal  revenue  taxes  on  alcohol,  spirituous  and  malted 
liquors,  sugar  and  matches,  and  on  the  salt,  tobacco  and  opium 
monopolies.*  No  attempt  has  ever  been  made  to  build  up  an 
adequate  system  of  real  and  personal  property  Uxes,  nor  is 
ihere  a- y thing  approaching  a  real  income  tax. 

One  of  the  peculiarities  of  the  Peruvian  system  fs  that  the 
collection  of  all  taxes,  with  the  exception  of  customs  dues,  is 
placed  in  the  hands  of  a  private  company  known  as  the  Compaflia 
".ecaudadora  de  Impuestos  which  collects  the  taxes,  reserving 
as  commission  one  per  cent  of  the  proceeds  after  deducting 
from  the  gross  receipts  the  cost  of  collection.  Under  the  con- 
tract entered  into  with  the  government  in  1013,  the  company 
collects  the  following  taxes: 

1.  Tax  on  alcohol,  spirituous  and  malted  liquors. 

3.  Tax  on  sugar  intended  for  local  consumption. 

3.  Tax  on  matches. 

4.  Registration  taxes. 

5.  Tax  on  income  from  stocks  and  bonds. 

6.  Stamped  paper  tax. 

7.  Licenses  in  Lima  and  Callao. 

8.  Transfer  taxes. 

9.  Sale  of  stamped  paper  for  payment  of  fines  imposed 

by  the  courts  or  by  administrative  authorities. 

10.  Mining  tax. 

11.  Sale  of  paper  for  customs  declarations. 

12.  Local  taxes  on  consumption  of  vinous  and  spirituous 

liquors. 

13.  Port  charges. 

>The««  tax.,  have  been  supplemented  recently  by  the  introduction  of 
export  taxes  on  copper,  sugar  and  borax. 

12 


FINANCIAL  SYtTBM  AND  EmCT  OP  THE  WAR  THEREON         13 


The  Mine  company  administer*  the  state  monopoly  of  to*  icco 
and  opium.  The  salt  monopoly  is  administered  hy  another 
company — the  CompaAia  Salinera.  This  company  is  allowed 
i20,000  annually  by  the  government  for  expenses  of  adminis- 
tration. The  commission  which  it  receives,  and  which  enables 
it  to  pay  a  dividend  of  twelve  per  cent,  is  arranged  on  a  sliding 
scale  and  bascu  on  gross  receipts  from  the  sale  of  salt.  The 
scale  is  as  follows: 

First  year  3H  per  cent 

Second  "  J       " 

Third    "  2V,    "      " 

Fourth  " 2       "      " 

The  original  coniraci  entered  into  in  1010  was  made  for  a 
period  of  four  years,  and  would  naturally  have  expired  in  1014. 
In  Article  2  of  the  contract  there  is  a  clause  providing  for  the 
continuation  of  the  contract  until  the  government  has  repaid  the 
amount  advanced  to  it  by  the  company.  Inasmuch  as  such  re- 
payment has  not  been  possible,  the  contract  continues  under  the 
terms  stated,  viz.,  a  two  per  cent  commission. 

The  relative  importance  of  the  various  sources  of  income 
ia  shown  in  the  following  table. 

1912 


191J 

r/,019.220 

1,687.606 

47J.403 

169,779 

1,259.484 

2,194,411 

84.034 

94.848 

545,550 

16,456 

.  ,870 

'  .,972 

22,871 

326.752 

698,358 

168,457 

1,538,414 

<S16,648,110  $16,414,485 

•A  municipal  tax,  similar  in  many  respects  to  the  French  "octroi,"  im- 
posed on  wines  ard  spirits,  also  on  agricultural  products  on  entering  the 
city.  It  also  includes  peddlers'  license  taxes,  which  are  imposed  by  the 
municipality. 


Customs  revenues  $7,376,887 

Alcohol  tax   1,612.111 

SiiKar  tax   493,7*^8 

Tax  on  matches  140,600 

.Salt  monopoly    1,191.410 

Tobacco  monopoly  2,101.483 

Opium  monopoly  91.616 

Denatured  alcohol  tax  97,501 

Mojonazgo*    521,828 

Sale  of  guano 15,615 

Fines  imposed  by  police  courts  185,652 

Departmental  incomes   67,442 

Income  from  docks  and  wharves 32,023 

Consular  fees   

Postal  revenues  

Telegraph   

Miscellaneous  revenues   2.720234 


14 


THE  EARLY   EFFECTS  OF  THE   WAR   UPON   PERU 


We  have  had  occasion  to  refer  to  the  fact  that  the  years  1912 
and  1913  were  years  of  industrial  and  financial  depression  in 
Peru.  The  low  price  of  copper  and  of  sugar  had  placed  the 
leading  industries  of  the  country  in  a  precarious  condition,  and 
these  unfavorable  economic  circumstances  were  further  aggra- 
vated by  unstable  political  conditions.  Guillermo  Billinghurst 
was  elected  President  of  Peru  in  1912.  Soon  after  his  accession 
to  power  differences  developed  with  the  national  Congress  which 
became  more  acute  during  the  course  of  the  year  1913.  A 
situation  finally  developed  which  led  the  Congress  to  express 
its  opposition  by  refusing  to  vote  the  budget  for  1914.  The 
President  thereupon  declared  that  in  view  of  this  refusal  he 
would  regard  the  budget  of  the  previous  year  as  in  force,  and 
proceeded  to  act  accordingly. 

In  February,  1914,  a  military  uprising  led  by  Colonel  Bena- 
vides  forced  the  resignation  of  President  Billinghurst  and  ex- 
iled him  from  the  country.  The  Congress  thereupon  proceeded 
to  elect  Colonel  Benavides,  whose  rank  was  raised  to  that  of 
general,  to  the  provisional  presidency  of  Peru  pending  a  new 
election. 

Whatever  may  have  been  the  rights  or  wrongs  of  the  situation, 
the  political  unrest  and  uncertainty  incident  to  this  violent  change 
served  to  aggravate  the  commercial  depression  from  which  the 
country  was  suffering. 

The  outbreak  of  the'  World  War  found  Peru,  therefore,  in 
the  most  unfavorable  economic,  financial  and  governmental  situ- 
ation to  withstand  the  strain  which  the  European  conflict  in- 
volved. Under  the  most  favorable  conditions,  Peru  is  a  coun- 
try financially  dependent  on  Europe.  Her  merchants  have  been 
accustomed  to  long  term  credits,  her  banks  are  in  the  main 
financed  by  European  capital.  In  order  to  avoid  confusion,  we 
will  confine  the  present  discussion  to  the  effect  of  the  war  on 
government  finances,  reserving  for  a  subsequent  section  the 
analysis  of  the  effect  on  general  commercial  and  financial 
conditions. 

The  immediate  effect  of  the  war  was  to  bring  about  a  violent 


FINANCIAL  SYSTEM  AND  EFFECT  OF  THE  WAR  THEREON         15 

decline  in  customs  receipts  as  well  as  a  marked,  although  less 
serious,  decline  in  the  revenues  from  other  sources.  The  extent 
of  this  decline  is  readily  seen  from  the  following  tables: ' 

CUSTOMS  RECEIPTS  AND  INTERNAL  REVENUES 

Source  of  Revenue                           Last  6  mos.,  1913      Last  6  mos.,  1914 

Alcohol  tax   $988,204  $813,404 

Excise  tax                92,703  97.666 

Sugartax  296.468  210,337 

Dues  paid  to  captains  of  ports  6.117  ,^'^^ 

Denatured  alcohol  tax   49.4U  S  .069 

Opium  monopoly  45.877  ol.olS 

Tobacco  monopoly  1,200240  '•'^•^ 

Liehthouse     8,761  6,885 

Matches                      90.630  71.494 

Mines 109.794  89.337 

Stamped  paper   75,988  63,942 

Customs  house  paper   20,670  .IH^X 

Patents    198,235  125,400 

Registry  of  property   29,521  24,909 

School  taxes,  including 

Dept.  incomes   415.733  371,800 

Police,  Callao   3,760  3,269 

Revenue  stamps   68,192  5  ,^20 

Mine  revenue  stamps  4,188  1,787 

Contributions  and  fines  on  alcohol   4,876  3,422 

Total    $3,759,349  $3,182,322 

Decrease,  $577,027 

Total  customs  receipts,  1913 $6,109,650 

Total  customs  receipts,  1914 4,692.799 

Total  customs  receipts,  1st  6  mos.,  1914 3,082.456 

Total  customs  receipts,  2d  6  mos.,  1914 1,610,343 

Total  customs  receipts,  1st  4  mos.,  1915 845,631 


CUSTOMS  REVENUES 


1914 

lanuary  $510,509 

February     462,982 

March   '. 569,992 

April    595,857 

May    468,470 

June   474,f46 

$3,082,456 

'For  these  figures  the  author  desires  to  express  his  obligation  to  the 
Honorable  William  \V.  Handley,  Consul  General  of  the  United  States  at 
Callao,  Peru. 


1915 

Decrease 

$220,756 

$289,753 

152.151 

310.831 

226  373 

.M3.619 

246,351 

349,506 

177.340 

291,130 

208,441 

266,205 

1,231,412 

$1,851,044  (60%) 

16 


THE  EARLY  EFFECTS  OF  THE  WAR  UPON   PERU 


DECLINE  IN  REVENUES 

Total  Receipts 

1913  1914 

January  $477,582  ?S10,S09 

February    465,505  462,982 

March    487,788  569.992 

April    569,218  595.857 

^fay   558.404  468,470 

June  499,608  474,646 

July    460,762  422,591 

August    550,837  186,672 

September    447,985  217,678 

October  594,237  288,320 

November    460,869  262,147 

December   536,855  232,935 

Totals  $6,109,650  $4,692,799 


Increase 

Decrease 

1914 

1914 

$32,927 

$ 



2,523 

82,204 

26,639 

89,934 

24,962 

38,171 

364,165 

230,307 

305,917 

198,722 

303,920 

$141,760      $1,558,621 


FINANCIAL  SYSTEM  AND  EFFECT  OF  THE  WAR  THEREON 


17 


s.  i 


--,M       N 


2  •* 


O 

a, 

< 

a 

> 

Q 
Z 

(d 

S 
H 

H 
< 

(A 

u 
> 

w 
a: 

I/) 
o 

u 


Bm   *-*  t-«  f»«  (V|  *^  ^n  ^n       ^<  *m 


_  ^^ r^ O 00 Ovm i> tx 


r  its: 


^^^3S(QS2^'^'^2 


>>i£)txoo»*oo90r^»5vO>r>t 


0500  — \OE>AOv— •SatMtv 


W»' 


•-«  rq «-« C^  ,1  •-*      ^"  «-M 


■S  >'h 

e     ^   ^  f- 


=  ^  «  &  "J  =  •=  3  j7  o  o  S 
Acfc  S  <  S  .^-^<  t«  O  i:  Q 


I  a 


%  2^ 


g 

M- 

S 

in 

i 

^    55- 


On 


16 


THE  EARLY  EFFECTS  OF  THE  WAR  UPON  PERU 


These  figures  show  that  the  decline  in  customs  revenues  alone 
in  1914  as  compared  with  1913  was  thirty-three  per  cent.  If, 
however,  we  compare  the  last  six  months  of  1913  with  the  last 
six  months  of  1914,  the  decrease  amounts  to  forty-seven  per 
cent.  The  first  four  months  of  1915  show  a  decline  of  over 
sixty  per  cent,  i.e.,  $2,139,340  for  the  first  four  months  of  1914 
as  compared  with  $845,631  for  the  similar  period  of  1915. 

Furthermore,  to  aggravate  the  situation,  the  credit  of  the 
government  practically  disappeared.  The  most  important  gov- 
ernment assets  had  been  mortgaged — the  state  railways  and 
guano  deposits  to  the  Peruvian  Corporation,  the  alcohol  tax 
for  the  interest  and  liquidation  of  an  existing  loan,  the  salt 
monopoly  foi-  the  construction  contract  of  the  Ucayali  Railroad. 
In  July,  1915,  the  government  was  making  frantic  endeavors 
to  borrow  small  or  large  sums  in  every  possible  quarter.  Sugar 
planters  were  receiving  requests  for  payments  of  taxes  in  ad- 
vance, customs  house  brokers  were  asked  to  pay  dues  in  advance 
of  the  receipt  of  merchandise.  For  loans  of  any  amount,  the 
government  was  prepared  to  accept  the  most  onerous  terms.  On 
July  27,  for  instance,  a  temporary  loan  of  £44,000  was  ^-^  .ed 
from  a  German  sugar  house  at  eight  per  cent,  and  a  bonus 
a  valuable  perpetual  concession  was  given  for  the  construction 
of  a  pier  and  railway  at  one  of  the  northern  ports.  The  ques- 
tion confronting  the  authorities  was  the  payn.^nt  of  current  ex- 
penses, as  the  salaries  of  many  government  employes,  including 
teachers  in  the  public  schools,  were  in  arrears  for  a  considerable 
period. 

The  newly  elected  President,  Dr.  Jose  Pardo,  assumed  office 
in  August,  1915,  and  immediately  began  to  put  into  effect  plans 
for  securing  increased  revenue  from  taxation.  The  first  meas- 
ure presented  to  the  Peruvian  Congress  was  an  export  tax  on 
minerals  and  other  national  products.  The  rates  as  finally 
adopted  by  the  national  Congress  are  as  follows : 


1.    Copper: 

When  London  standard  quotation  is  £G0  to  £65  sterling, 


FINANCIAL  SYSTEM  AND  EFFECT  OF  THE  WAR  THEREON 


19 


a  tax  of  15s.  per  ton  of  1016  kilos  gross  weight  is  in- 
curred, increasing  2s.  for  each  pound  increase  in  price. 

2.  Gold: 

If  over  ten  grams,  £2  sterling  per  kilo  fine  gold. 

3.  Silver: 

When  23%rf.  to  24Virf.  per  standard  ounce  Troy,  a  tax 
of  Qd.  per  Vilogram;  from  24^/4  to  25 V^,  Is.  per  kilo- 
gram; from  25 V^  upwards,  2s.  per  kilogram. 

Export  taxes  were  to  be  payable  in  ninety  days  drafts  on 
New  York  or  at  shippers'  option  in  the  equivalent  in  drafts 
on  London.  No  exchange  rate  had  as  yet  been  fixed.  The 
Chamber  of  Commerce  was  to  fix  copper  and  silver  prices 
weekly,  based  on  London  quotations.  The  export  tax  came  into 
force  at  once. 


Sugar: 

When  the  price  of  sugar  was  quoted  at  ll.y.  6rf.  sterling, 
on  board  ship  at  the  port  of  shipment,  a  tax  of  &d. 
sterling  for  each  hundredweight  of  one  hundred  pounds, 
ninety-six  per  cent  polarization,  was  imposed. 
Cotton: 

The  tax  on  cotton  exported  from  Peru  was  based  upon 
the  Spanish  "quintal"  (hundredweight)  gross  weight, 
placed  on  board  at  the  port  of  shipment. 

For  Peruvian  Rough  Cotton.  When  the  price  at- 
tained the  figure  of  TVid.  per  pound,  a  tax  of  iVjd. 
per  Spanish  quintal  of  one  hundred  pounds  was  im- 
posed. For  each  halfpenny  increase  in  price  per  pound 
the  tax  was  increased  by  2V2</.  per  quintal. 

For  Sciiu-Rough  and  Mitafifi  Cotton.  Five  pence 
per  quintal  when  the  price  reached  7d.  per  pound  placed 
on  board  at  the  port  of  shipment,  rising  iV^d.  per 
quintal  for  eacli  halfpenny  increase  per  poun-'.  in  the 
price  of  the  product. 

Smooth  Cotton.    Starting  from  the  price  of  HYzd.  to 


^ 


20 


THE   EARLY   EFFECTS  OF  THE    WAR   UPON   PERU 


6%d.  per  pound,  6d.  per  Spanish  quintal  of  one  hundred 
pounds.  From  6V6(/.  to  7\1.  per  pound,  Ij.  per  quintal. 
From  7%d.  per  pound,  2s.  per  quintal. 

6.    Wool: 

When  tile  quotation  in  Liverpool  for  washed  wool  of 
first  quality  from  Arequipa  reaches  Ud.  or  more  per 
pound,  the  tax  is  2s.  per  each  quintal  of  one  hundred 
Spanish  pounds,  gross  weight. 

6.    Hides: 

Wet.    Three  farthings  per  kilogram. 

Dry.    One  and  one-quarter  pence  per  kilogram. 

The  Peruvian  Government  contemplated  floating  a  foreign 
loan  for  the  purpose  of  meeting  a  number  of  outstanding  obli- 
gations. Pending  the  negotiation  of  this  loan  the  proceeds  of 
the  export  tax  were  to  be  used  as  folio   s : 


'nttmal  Debt: 
For  the  service  of  vales  of  consolidation  issued 

under  the  law  of  June  12,  1889 25,000.0.00 

For  the  service  of  amortizable  bonds  created  by 
the  law  of  December  17,  1898 2.S.000.0.00 

Peruvian  Steamship  Comfany: 
For  amortization  and  interest  of  the  first  loan..,  30,000,0.00 
Interest  on  bank  loans,  acceptances  and  advances 
by  the  National  Tax  Collecting  Company 25,000.0.00 

Post  Office  Debts: 
Due  to  foreign  post  offices  for  money  orders  and 
territorial   transit  of   mails 

Treasury  Obligations: 
15%  on  £78,400.0.00,  value  in  circulation 

Departmental  Treasury  Drafts: 
25%  on  £65.565.0.34,  value  of  the  drafts  drawn 
by  the  treasuries 

Loans  b\  W.  R.  Grace  &  Co.  Syndicate: 
6'/i%  interest  on  £85,320.3.08,  balance  of  the  first 

loan  of  December  3.  1913  (£200,000) 5,545.8.20 

6}4%    interest    on    £196,666.6.66,    balance    of    the 

second  loan  of  July  3,  1914  (£200,000) \2,7U.3.ii 

•  Peruvian  pound  is  equal  to  $4.86,  American  gold. 
I"  Each  sole  represents  50  cents,  American  gold. 
'  Each  centavo  is  equal  to  Yi  cent,  .American  gold. 


c  •       « 

2  <"  »   9 

•5-0-0   > 
^  e  cA  t« 

V  o  o  C 


50,000.0.00 

55.000.0.00 

10,000.0.00 
11,760.0.00 

16,391.2.58 
18,329.1.53 


FINANCIAL  SYSTEM  AND  EFFECT  OF  THE  WAR  THEREON 


21 


Loan  by  Gildemtisttr  &  Co.  (Law  No.  2111): 
2S%  on  i41.811.4.99,  value  of  the  notes  Nos.  5  to 
16,  and  21,  due  during  the  present  year 

Banco  del  Peru  y  Londres: 
10%  interest  on  f 77,696 .6.90,  advances  on  account 
current    

Banks'  Loan  of  November  20,  1912  (£654,800) : 
Interest  at  8%  on  the  following  balances: 

Banco  del  Peru  y  Londres 243.131. 7. t>4    19.450. 5.41 

Banco  Aleman  Transatlantico. ..  81.384.2.35      6,510.7.38 
Banco  Intemacional  2.555.6.62        204,4.53 

Banco  Aleman  Transatldniico: 
Loan  of  il80.000.0.00  (Law  No.  2111) : 

Service  of  interest  at  8%  on  £36.000,  which 
constitutes  the  bank's  gold  deposit  with  the 
Junta  de  Vigilancia 

Banco  Popular: 
Loan  of  £25,500  (Law  No.  2111) : 

Service  of  interest  at  8%  on  £55,000.  which 
constitutes  the  bank's  gold  deposit  with  the 
Junta  de  Vigilancia 

Interests  for  Bank  Loans,  Acceptances  and  Advances 
of  the  National  Tax  Collecting  Company: 
For  the  balance  due  this  service 

Bank  Loan  of  £500.000  in  Circular  Bank  Notes: 
10%  of  the  net  revenue  derived  from  the  tobacco 
tax.  intended  for  the  amortization  cf  the  above 
loan,  as  per  Art.  7  of  Law  No.  1982 

Peruvian  Corporation  Limited: 
25%  of  the  annual  payment  of  £80.000  stipulated 
in  the  contract  of  1907 

Caja  de  Depositos  y  Consignaciones   (Judicial  De- 
posits Bank) : 
For  the  service  of  amortization  and  interest  on 
the  loans  made  by  this  institution 

Grand  Total    


||S| 
10.452.8.75 


7769.6.69 

26,165.7.32 
2,880.0.00 

440.0.00 
4.000.0.00 

32,000.0.00 
20,000.0.00 

5.273.9.73 
270,462.6.60 


In  order  further  to  increase  the  national  revenues  a  system 

of  inheritar.  •    taxes  has  been  imposed  in  accordance  with  the 

following  schedule : 

Inheritances  of  not  more  than  $120,000  from  parents  to  children 1% 

Inheritances  of  not  more  than  $120,000  from  children  to  parents 1% 

Inheritances  from  very  distant  relatives  or  strangers 10% 


S9 


THE  EARLY  EFFECTS  OF  THE  WAR  UPON   PERU 


These  rates  of  taxation  were  applied  only  to  inheritances  not 
exceeding  $120,000.  while  on  inheritances  above  this  amount 
the  rates  increased  until  on  $240,000  or  more,  two  pe-  -n 
is  the  lowest  tax  paid  and  eleven  per  cent  the  highest.  In  the 
case  of  daughters  receiving  an  inheritance  not  exceeding  $2,400 
an  exception  was  made,  as  well  as  in  the  case  of  bequests  re- 
ceived by  charitable  or  public  institutions.  The  highest  rates 
were  exacted  when  natives,  as  well  as  foreigners  residing  outside 
of  Peru,  inherit  property  in  Peru.  It  was  expected  that  this  new 
system  of  inheritance  taxes  would  mean  a  considerable  increase 
in  national  revenues. 

Although  the  war  in  Europe  rendered  the  financial  situation 
more  acute  by  greatly  diminishing  the  ordinary  revenues,  the 
needs  of  the  country  are  beyond  the  present  sources  of  income. 
In  no  part  of  the  country  does  real  estate  pay  its  due  share 
toward  the  support  of  the  government.  Were  this  supplemented 
by  a  comprehensive  income  tax  it  would  be  possible  to  dispense 
with  many  of  the  present  indirect  taxes  which  weigh  most  heav- 
ily on  the  poorer  classes.  In  fact,  under  the  present  financial 
system  of  Peru,  the  laboring  classes  are  compelled  to  bear  the 
heaviest  burden  of  taxation  whereas  the  wealthy  escape  with 
a  totally  inadequate  contribution  to  the  public  treasury. 

It  is  contended  by  many  that  with  comparatively  JTttle  effort 
the  government  could  effect  considerable  economies  within  the 
present  budget.  While  this  is  undoubtedly  true,  it  is  doubtful 
whether  the  savings  to  be  effected  would  be  sufficient  to  restore 
equilibrium  to  the  national  budget.  In  the  meantime  large  sums 
are  required  to  meet  such  pressing  necessities  as  public  educa- 
tion, sanitation,  hospitals,  and  asylums  for  the  defective.  These 
can  be  secured  only  through  an  improved  fiscal  system,  which 
will  at  the  same  time  strengthen  the  credit  of  the  country. 

It  is  to  be  noted  in  this  connection  that  expenditures  for  mili- 
tary and  naval  purposes  represent  a  heavy  burden  on  the  Peru- 
vian treasury.  The  accompanying  table  sets  forth  the  relative 
amounts  expended  by  the  national  government  for  educational 
and  for  military  purposes.    It  is  true  that  the  local  subdivisions 


FINANCIAL  SYSTEM  AND  EFFECT  OF  THE  WAR  THEREON 


23 


—the  departments — supplement  the  expenditures  for  public  ed- 
ucation by  sums  which  are  relatively  !>mall  and  totally  inadequate 
to  meet  the  requirements  of  a  well  organized  system  of  national 
education. 


Total 
Date  Income       Education 

1906  $12.181,0.16   $1.13.587 

1907  13,021.2.13   1..100.886 

1908  14,567,573   1.301,129 

1909  14,805.436   1,.188.876 

1910  13.461.777    980,588 

1911  

1912  15.915,125    144,677 

1913 

1914  17,242,483         144.065 

1915  13.837,756      1,271.444 


Until  some  final  settlement  is  reached  with  reference  to  the 
status  of  the  province  of  Tacna-Arica,  it  is  not  likely  that  Peru 
will  be  willing  to  make  any  considerable  reductions  in  her  mili- 
tary expenditures. 


%  of  Total 

Income    F.x- 

prndcd    for 

Education 

Army  and 
\avy 

%  of  Total 
Income    Ex- 
pended   for 
Army  and 
.\avy 

1 

9.9 
8.9 
9.3 
7.2 

$2,189,673 
2.295.762 
2.450.261 
2,741,803 
2.406.103 

17.9 
17.6 
16.8 
18.5 
17.8 

'6.9 

2.431.492 

'lS.2 

0.8 
9.1 

3,Y68'.739 
3,519,563 

'I's'i 

25.4 

CHAPTER  IV 

Commercial  and  Industrial  Sitiution  Created  by  the  War 

We  have  had  occasion  to  review  briefly  the  commercial  and 
industrial  conditions  during  the  years  immediately  preceding  the 
war.  Weakened  by  a  series  of  years  of  economic  depression, 
Peru  was  in  no  position  to  bear  the  exceptional  strain  produced 
by  the  war.  It  is  not  surprising,  therefore,  to  find  the  country 
compelled  to  adopt  drastic  measures  in  order  to  prevent  the  com- 
plete ruin  of  her  financial  institutions  as  well  as  her  commercial 
and  industrial  enterprises. 

The  measures  adopted  may  be  divided  into  the  following 
classes : 

a.  Declaration  of  bank  holidays  and  moratoria. 

b.  Measures  relating  to  the  issuance  of  what  are  known 

as  circular  checks. 

c.  Measures  relating  to  the  exportation  of  gold  and  silver. 
(/.  Measures  relating  to  the  price  of  necessaries  of  life. 
c.    Measures  relating  to  the  status  of  labor. 

/.    Measures  relating  to  taxation. 

g.  Reducing  the  expenditures  as  authori2:ed  by  the  budget. 


A.     D"CLARATION   OF   BaNK    HOLIDAYS  AND   MORATORlA 

The  worldwide  financial  panic  precipitated  by  the  war  threat- 
ened the  solvency  of  all  the  banking  institutions  of  Teru  and  led 
to  the  promulgation  of  an  executive  order  dated  August  2,  1914, 
declaring  the  third,  fourth  and  fifth  days  of  that  month  holidays. 
On  August  5  a  further  order  was  issued  declaring  the  sixth 
and  seventh  holidays. 

The  following  day — August  6 — the  first  moratorium  was  de- 
clared for  a  period  of  thirty  days.  The  decree  provided  that 
during  this  period  the  obligation  to  pay  banking  and  commercial 

24 


COMMERCIAL  AND  INDUSTRIAL  SITUATION 


95 


debts  should  be  limited  to  five  per  cent  of  the  total  amount 
owed.  On  August  7  a  further  decree  was  issued  modifying  the 
foregoing  as  follows: 

1.  Requiring  the  banks  to  pay  all  depositors  whose  balance 
did  not  exceed  £!>. 

2.  On  balances  exceeding  £5  the  banks  are  required  to  pay 
five  per  cent  of  the  total,  provided  that  the  minimum  tc  \x  paid 
shall  be  not  less  than  £5,  and  the  maximum  £1.'jO. 

On  Septemlicr  10  a  further  moratorium  of  fifteen  days  was 
decreed,  which  was  again  extended  on  Sepi  .ml)er  2:>,  for  a 
further  period  of  eight  days,  expiring  on  October  :t.  I!tl4.  It 
may  be  added  that  by  law  of  Septemlter  8.  lJtl4,  the  Congress 
specifically  authorized  the  President  to  declare  such  moratoria 
as  he  might  deem  necessary. 

On  October  4  the  President  decreed  a  fourth  and  final  mora- 
tori'.im  for  a  period  of  ten  da>..,  i.e.,  until  OctoU'r  l.'l.  On  that 
(late  a  further  decree  was  issued  which,  as  nuxlitit-d  by  the  law 
of  December  11>,  1{»14,  provides  that  notes,  bills  of  exchange 
and  debts  for  merchandise  received  should  be  paid  in  monthly 
quotas  of  five  per  cent  during  the  first  two  months  and  ten 
per  cent  thereafter.  Obligations  not  included  in  the  foregoing, 
.md  for  which  no  collateral  security  existed  were  to  be  paid  in 
monthly  quotas  of  fifteen  per  cent.  With  reference  to  bank 
deposits.  Article  4  of  this  law  requires  that  such  deposits  \yc 
paid  in  monthly  quotas  of  ten  per  cent.  It  is  furthermore  pro- 
vided that  tenants  ■  i.o  made  no  payments  because  ol  tho  mora- 
torium should  be  permitted  to  pay  arrears,  due  from  July  1  to 
September  30  in  four  monthly  quotas  of  twenty-five  per  cent 
each. 

B.    The  "Cheques  Circul.\res  "   (Circular  Checks) 

The  financial  panic  produced  by  the  war  led  to  the  immediate 
withdrawal  of  gold  and  silver  currency  from  circulation.  While 
the  moratoria  served  to  save  the  financial  institutions  from  ruin, 
they  accentuated  the  feeling  of  uncertainty  and  alarm  and  em- 
phasized the  tendency  to  hoard  gold.     .-\n  unusual  demand  for 


. 


28 


TMK  KAKLY  EPrKCTS  Of  Tll^  WAR  UPON  PEBU 


•afe»  and  strung  Imixcs  wis  noticcaUe  throughout  the  country. 
The  lack  ut  circulating  medium  became  so  marked  that  the 
banks  ap|K*aled  to  the  government  for  power  to  remedy  the 
tituatiun,  for  without  some  remedial  measures  they  would  have 
been  unable  to  meet  their  uiiligations  at  the  expiration  of  the 
moratorium. 

At  the  urgent  request  of  the  banks  a  series  of  measures  was 
passed  providing  fur  the  issuance  of  what  are  known  in  Peru 
as  "  chcitues  circu'  ;res,"  or  circular  checks.  The  first  of  the 
laws  relating  tu  the  subject  was  passed  on  August  i'l',  lUH. 
I'lulcr  this  law  the  banks  were  authorized  to  issue  circular 
checks  ''ayablc  to  l)earer  lo  an  amount  not  exceeding  £l,10(),t)uo. 
L'ntlcr  .\rticle  1  of  this  law  the  legal  reserve  against  such  issues 
was  fixed  at  thirty-five  per  cent  in  guhl  and  sixty-five  per  cent 
in  real  property,  mortgages  and  warehouse  warrants.  A  sub- 
sequent law.  that  of  October  1.  11»14,  reduced  the  requirement 
of  gold  reserve  to  twenty  per  cent,  the  remaining  eighty  per 
cent  to  be  distributed  as  follows:  thirty  per  cent  in  mortgage 
"  cedulas "  assessed  at  their  face  value,  ordinary  mortgages 
assessed  at  seventy-five  per  cent  of  their  face  value,  real  property 
owned  by  the  bank  assessed  at  seventy-five  per  cent  of  its  market 
value  or  warehouse  warrants,  fifty  per  cent  in  negotiable  paper 
acceptable  to  the  supervising  committee  established  by  the  law. 
This  supervising  committee  is  composed  of  two  members  desig- 
nated by  the  national  Congress  (one  representing  the  majority 
and  the  other  the  minority  party),  one  member  designated  by 
the  President,  one  representative  of  the  banks  and  one  repre- 
sentative of  the  Chamber  of  Commerce  of  Lima. 

The  law  of  August  22,  1!U4,  furthermore  provided  that  the 
banks  should  loan  to  the  government  £100,000  of  the  checks  thus 
issued,  the  loan  to  bear  interest  at  seven  per  cent.  Under  Article 
7  of  the  law  of  October  1.  1014,  the  amount  of  this  loan  was 
raised  to  £500,000  and  the  interest  reduced  to  six  per  cent.  As 
a  guarantee  of  the  payment  of  principal  and  interest,  the  govern- 
ment mortgaged  twenty  per  cent  of  the  net  receipts  of  the  to- 
bacco monopoly. 


COMMKKCIAL  AND  ISni'.HTRIAL  SITl'ATION  27 

Accetling  to  the  urgent  ciemands  of  the  Unks,  the  national 
Congress,  in  the  Act  of  C)ctol)cr  1.  1I»14.  authoriic<l  the  banks 
to  increase  the  issue  of  "  cherjues  circulares  "  by  an  amount  not 
exceeding  il.ioo.ooo.  thus  making  their  total  issue  £-2.-200,' 
000.  In  addition,  the  National  Savii  ijs  Bank,  which  is  man- 
aged by  the  National  Charity  Found-tion  (Swit-dad  de  Uene- 
ficencia)  is  authorized  to  issue  circuiar  checks  to  an  amount  not 
excec<ling  £;J(M),(MM>.  Thus  the  total  issue  authorized  by  law 
is  brought  up  to  i^.soo.iwo.  The  law,  furthermore,  provides 
(Art.  ».  law  of  August  22,  1914)  that  all  checks  must  Ik;  with- 
drawn from  circulation  "  six  months  after  the  close  of  th ;  war 
between  France,  England  and  Germany." 

From  the  outset  these  checks  have  been  received  with  great 
reluctance  by  the  retail  trade,  owing,  in  large  part,  to  the  under- 
mining of  public  confidence  in  the  banks,  and  to  the  fear  that 
the  checks  would  not  Iw  redeemed  at  the  time  indicated.  In 
the  country  districts  the  laboring  population  has  absiilutely  re- 
fused to  accept  this  paper  money,  demanding  the  payment  of 
wages  in  the  silver  sole  to  which  they  have  Iwen  accustomed. 
The  inevitable  result  has  l)een  tlic  gradual  depreciation  of  the 
Peruvian  paper  pound.  In  August,  li)!.".,  this  depreciation 
amounted  to  sixteen  per  cent. 


C.  Measi'res  Relating  to  Exportation  of  Gold  and  Silver 

On  August  S,  1014.  the  national  Congress  passed  a  law  for- 
bidding the  expuitation  of  gold  and  of  minted  silver. 

D.  Measures  Relating  to  the  Price  of  Necessaries  of  Life 

On  August  10.  1914.  the  Congress  passed  a  law  empowering 
the  national  executive  to  take  such  measures  as  might  be  deemed 
necessary  to  prevent  the  undue  rise  in  the  price  of  articles  of 
primary  necessity.  Other  than  to  undertake  a  series  of  inquiries 
as  to  prevailing  prices,  no  measures  have  been  taken  by  the 
President  in  pursuance  of  the  power  vested  in  him  by  the  above- 
mentioned  law. 


28 


THE  EARLY  EFFECTS  OF  THE  WAR  UPON   PERU 


E.    Measures  Relating  to  the  Status  of  Labor 

With  the  ou*\rcnk  c  the  war  and  the  consequent  paralyzation 
of  commei  <•  :  ni  oce  i  transportation  facilities,  the  mining 
enterprises  b-'tn  iM  tee  their  labor  force.  Similar  reductions 
were  made  in  many  of  the  cotton  mills.  The  low  rate  of  wages 
prevailing  in  all  the  industries  of  Peru  makes  it  practically  im- 
possible for  the  laborer  to  set  aside  anything  for  periods  of 
emergency. 

Early  in  1913,  when  the  industrial  depression,  especially  in 
the  mining  industries,  had  made  itself  felt  in  all  sections  of  the 
country,  the  President,  in  pursuance  of  powers  vested  in  him  by 
the  Congress,  issued  a  decree  requiring  industrial  establishments 
to  give  notice  to  the  local  authorities  whenever  for  reasons  of 
an  economic  or  industrial  character  they  were  planning  to  dis- 
continue operating  the  plants. 

On  August  9, 1914,  in  order  to  extend  further  protection  to  the 
laboring  classes,  the  President  issued  a  decree  requiring  employ- 
ers to  give  to  their  working  men  at  least  twenty-four  hours' 
notice  of  dismissal,  and  to  file,  in  writing,  with  the  subprefect  of 
the  department  the  reasons  for  such  reduction  and  the  names 
of  the  laborers  discharged. 


F.    Measures  Intended  to  Increase  the  Ordinary 
Rev^enues  of  the  Government 

The  violent  decline  in  customs  receipts  and  other  ordinary 
revenues  immediately  after  the  outbreak  of  the  war  led  to  an 
attempt  to  increase  revenues  by  increasing  certain  existing  taxes 
and  introducing  new  forms  of  taxation.  These  measures  were 
as  follows: 

1.  Requiring  corporations  and  joint  stock  companies  to  place 
a  special  stamp  of  the  value  of  two  centavos  (one  cent)  on  each 
page  of  the  ledgers  and  other  books  which  they  are  required  to 
keep  according  to  the  provisions  of  the  Code  of  Commerce. 
Letter  copy  books  are  exempt  from  this  requirement. 


COMMERCIAL  AND  INDUSTRIAL  SITUATION 


29 


2.  Raising  by  twenty  per  cent  the  price  of  all  tobacco  sold 
by  the  State  Tobacco  Monopoly. 

3.  Increasing  the  tax  on  all  vinous,  malt  and  spirituous  liquors 
and  on  alcohol. 

4.  Increasing  to  six  per  cent  the  tax  on  the  income  from 
mobile  capital. 

G.    Reducin'    Public   Expenditures 
In  an  attempt  to  l  .j  ie  the  l)uc!;:;e:  '^^alance,  a  law  was  passed 
reducing  by  thirty  pt .  ceui  the  iten  y  of  the  national  budget. 

Effect  of  the  \V  ...  '  s  li  5ME.-)TIC  and  Foreign  Trade 
Owing  to  the  dependence  of  Peru  on  foreign  countries  for 
most  of  the  manufactured  articles  consumed  in  the  country,  it 
is  exceedingly  difficult  to  deal  with  the  effect  on  internal  com- 
merce without  at  the  same  time  discussing  the  situation  created 
by  the  dislocation  of  international  trade. 

Owing  to  the  lack  of  official  data,  the  condition  of  domestic 
trade  does  not  lend  itself  to  statistical  treatment.  Immediately 
after  the  outbreak  of  the  war,  the  domestic  commerce  of  the 
country  received  two  staggering  blows:  first,  the  sudden  cutting 
ofif  of  the  European  credits  to  which  the  merchants  had,  for 
generations,  been  accustomed  and,  secondly,  the  almost  complete 
disappearance  of  regular  ocean  communication  with  Europe. 
To  this  must,  of  course,  be  added  the  general  feeling  of  distrust 
toward  the  banks,  the  uneasiness  created  by  the  appearance  of 
inconvertible  paper  money  in  the  form  of  "  cheques  circulares  " 
and  the  further  discouragement  incident  to  a  rapid  and  steady 
fall  in  international  exchange.  In  this  emergency  Peruvian 
commerce  turned  to  the  United  States  in  the  hope  and  ex|)ecta- 
tion  of  securing  the  relief  which  Europe  was  unable  to  give. 
The  general  reluctance  on  the  part  of  .American  manufacturers 
and  merchants  to  extend  the  same  credits  which  their  European 
competitors  have  been  accustomed  to  extend,  has  been  a  source 
of  severe  disappointment  to  the  merchants  of  Peru.  They  point 
with  pride  to  the  fact  that  bankruptcies  are  of  less  frequent  oc- 


30 


THE  EARLY   EFFECTS  OF  THE   WAR  UPON    PERr 


currence  in  Peru  than  in  the  United  States,  and  that  the  per- 
centage of  loss  by  European  merchants  in  their  dealings  with 
Peru  has  been  exceedingly  small.  They  point  to  the  fact  that 
England's  commercial  position  in  South  America  in  general,  and 
in  Peru  in  particular,  has  been  built  up  on  the  basis  of  the 
ninety  day  draft,  and  that  in  recent  years  German  manufacturers 
have  not  hesitated  to  extend  six  months'  credit. 

While  a  few  American  manufacturers  have  been  willing  to 
extend  credits  to  a  restricted  group  of  merchants,  the  general 
tendency  has  been  to  refuse  to  meet  the  requirements  of  the 
Peruvian  market.  This  situation  has  served  to  render  more  acute 
the  difficulties  of  the  local  situation.  Merchants  find  their  stocks 
reduced  without  any  immediate  prospect  of  replenishing  them. 
While  their  fixed  charges  remain  the  same  the  total  sales  are 
constandy  diminishing  in  volume  and  amount.  To  add  to  the 
difficulties  of  the  situation,  the  internal  commerce  of  Peru,  which 
has  always  been  conducted  on  credit,  has  suddenly  been  placed 
on  a  cash  basis.  The  ensuing  paralyzation  was  almost  complete, 
the  retailers  in  the  country  districts  limiting  their  purchases  to 
the  articles  that  are  urgently  required  for  the  daily  consumption 
of  the  people.  Fortunately,  credit  is  still  being  extended  for 
certain  articles,  such  as  native  cotton  goods  and  the  cheaper 
grades  of  textiles.  Before  any  return  to  the  former  system  of 
liberal  credits  can  be  expected,  Peru  will  have  to  await  a  return 
of  general  confidence  in  the  financial  futii  e  of  the  country. 

We  have  had  occasion  to  refer  to  the  general  efTect  of  the 
war  on  international  trade,  but  it  is  important  to  supplement 
these  general  considerations  with  specific  data. 

Peru  is  a  country  consuming  but  a  very  small  percentage  of 
the  aivicles  which  it  produces.  Any  curtailment  of  the  foreign 
market,  therefore,  immediately  reacts  upon  the  entire  internal 
situation.  It  is  this  complete  dependence  on  the  foreign  market, 
combined  with  the  fact  that  all  the  important  national  enterprises 
are  dependent  on  foreign  capital,  that  gave  to  the  European 
war  such  a  disastrous  influence  on  Peru's  foreign  trade  and  upon 
her  domestic  financial  and  commercial  condition. 


COMMERCIAL  AND  INDUSTRIAL  SITUATION 


31 


The  immediate  effect  of  the  war  was  the  complete  paralyza- 
tion  of  all  foreign  trade.  In  spite  of  the  fact  that  the  nations 
at  war  needed  some  of  Peru's  leading  products,  especially  copper, 
sugar  and  wool,  the  presence  of  belligerent  cruisers  in  the  Pacific 
made  shipmeii  s  impossible.  The  result  was  the  immediate 
curtailment  of  production  in  the  mines  and  the  accumulation  of 
large  stocks  in  those  industries,  such  as  sugar  and  cotton,  in 
which  immediate  curtailment  was  impossible.  The  only  industry 
in  which  no  marked  decline  was  noticeable  was  in  the  cotton 
spinning  factories,  which  produce  the  coarser  grades  of  fabric 
for  local  consumption.  In  this  industry  the  leading  manufac- 
turers, in  order  to  keep  their  lalior  force  together,  made  a  de- 
termined effort  to  tide  over  the  crisis  without  closing  down  their 
plants  and  in  this  effort  were  largely  successful. 

Following  this  temporary  period  of  paralyzation,  during 
which  all  the  industries  of  the  country  suffered  ecjuaily,  the 
European  situation  soon  be^an  to  show  its  effect  in  a  markedly 
different  way  in  different  industries.  It  is  necessary,  therefore, 
to  consider  these  industries  separately. 

Sugar 
In  the  discussion  of  economic  conditions  immediately  preced- 
ing the  war,  we  had  occasion  to  refer  to  the  unsatisfactory  con- 
dition of  this  industry  during  the  years  li)ll,  1!»12  and  1913. 
Immediately  after  the  outbreak  of  the  war  the  price  of  sugar 
rose  violently  and  -Ithough  there  has  been  a  slight  decline 
within  recent  m  .  ''e  present  price  (August,  U»ir»)  means 
a  handsome  pro.  le  producer.     The  price  fluctuation  is 

shown  in  the  folio vvmg  table: 

White 

Price    per    Quintal 

(101.410  lbs.) 
F.  O.   B.,  Part  of 
1914  Shipment 

July   $2.64 

August   4.80 

December    4.44  to  4.64 

1915 
July  4..,  to  4.44  3.12  2.10 


Granulated 

Mascabado 

$1.92 

$1.41 

4.20 

2.48 

2.58 

32  THE  EARLY  EFFECTS  OF  THE  WAR   UPON   PEEU 

Inasmuch  as  some  20,000  laborers  are  employed  in  this  in- 
dustry, it  will  readily  be  seen  that  the  extraordinary  prosperity 
of  the  sugar  industry  will  contribute  considerably  toward  the 
industrial  recovery  of  the  country.  As  a  considerable  section 
of  the  cotton  lands  can  be  converted  to  sugar  production,  there 
is  a  widespread  tendency  to  extend  sugar  cultivation.  The  total 
export  in  1914  *  was 

Class  Metric  Tons  Value 

jyhite    7,04S  $571,877 

Granulated    145.335  11,190,045 

Mascabado  (Chancaca;   24,288  1,095,013 

Total    176,668  $12,856,935 

The  only  serious  handicap  to  the  producer  at  the  present 
moment  is  the  inordinately  high  freight  rate  to  Liverpool  and 
to  New  York.  The  normal  rate  to  Liverpool  is  about  $0.69  per 
ton.  At  the  present  time  (August,  1915)  the  quoted  rates  range 
from  $17  to  $19.44  per  ton.  With  the  scarcity  of  bottoms  there 
seems  to  be  no  immediate  prospect  of  an  improvement  in  this 
situation. 

Cotton 

In  sharp  contrast  with  the  condition  of  the  sugar  industry, 
cotton  raising  in  1913  and  during  the  early  months  of  1914  was 
in  an  exceptionally  flourishing  condition  owing  to  the  high  prices 
on  the  Liverpool  market.  "  j  will  be  seen  from  the  accompany- 
ing table,  prices  began  to  decline  with  the  outbreak  of  the  war, 
and  have  continued  a  steady  downward  course. 


PRICE  OF  COTTON,  JULY,  1914,  TO  JULY,  191S  (PER  POUND) 

Grade  Grade  Grade 

1914  Semi-Rough  Fair  Egipto  Sea  Island 

July  14  cents  14Vh  cents  26  cents 

September  llVi  :2%o  25V4 

October    10%  U% 

1915 

July  Scents  (no  quotations)      (no  quotations) 

*  See  Report  of  Wm.  W.  Handley,  Consul  General  of  the  United  States 
at  Callao. 


COMMERCIAL  AND  INDUSTRIAL  SITUATION  33 

The  main  reason  for  the  lack  of  quotations  is  the  fact  that 
the  rapid  rise  in  freight  rates  has  made  practically  prohibitory 
the  export  of  cotton.  Prior  to  the  war  the  rate  to  Liverpool, 
via  Panama,  was  $24.30  per  ton.  At  the  present  time  (August, 
1915),  the  only  quoted  rate  is  $48.60  per  ton,  which  makes 
shipping  impossible  at  the  present  market  price  of  cotton.  As  a 
result  of  this  situation  cotton  producers  are  facing  a  severe  crisis, 
with  the  prospect  of  having  to  market  the  present  crop  at  prices 
that  will  not  repay  the  cost  of  cultivation. 

It  may  be  added  that  during  this  entire  period  the  native  cot- 
ton fabrics  have  maintained  their  prices  unchanged,  the  '.uo- 
tation  for  plain  sheeting  being  fifty-five  centaros  (about  twenty- 
six  cents)  per  yard. 

The  export  of  cotton  during  1914  was  as  follows: 

Kilograms 

Egyptian   (Peru  soft)    '^•^^•^It 

Semi-rough    1i?All 

Mitafifi    hll^-'ili 

Sea  Island   ^-^^h^U 

Lint    133.073 

Waste ^•*.000 

Total    24,263.481 

Figures  for  1915  are  not  as  yet  available,  but  these  will  show  a 
marked  decline  in  the  amounts  exported. 

Wool 

Wool  raising,  like  Sugar  production,  has  profited  by  the  war. 
In  the  mountainous  districts  the  natives  raise  not  only  sheep 
but  also  secure  wool  from  the  vicuiia  and  llama,  but  mainly  from 
the  alpaca.  Of  the  latter,  Peru  exports  from  3,000  to  5,000  tons 
annually,  which  represents  three-fourths  of  the  world's  supply.* 
The  price  of  alpaca  wool  immediately  before  and  since  the  out- 
break of  the  war  has  been  as  follows : 


•  See  Otto  Wilson :  "  South  America  as  an  Export  Field,"  U.  S.  bureau 
of  Foreign  and  Domestic  Commerce,  1914. 


34  THE  EARLY   EFFECTS  OF  THE  WAR   UPON    PERU 

*"*  Price  per  Pound 

December   28 

1015 

January   37 
"y 37 

The  fact  that  the  total  export  of  alpaca  wool  is  comparatively 
small,  amounting  to  $1,573,081  in  1913.  explains  why  the  favor- 
able condition  of  the  wool  market  has  not  had  a  marked  effect 
on  the  general  economic  condition  of  the  country. 


Copper 
In  the  introductory  discussion  of  conditions  in  Peru  immedi- 
ately preceding  the  war,  we  had  occasion  to  see  that  the  condi- 
tion of  the  copper  market  was  only  fairly  satisfactory.  With 
the  steady  decline  in  price  toward  the  end  of  1U13  the  situation 
became  distinctly  unfavorable.  Although  there  was  a  slight  re- 
covery early  in  1915,  the  downward  movement  soon  resumed 
its  course  until  in  July.  1914,  the  rate  for  fine  copper  in  bar 
delivered  in  New  York  was  13.50  cents.  The  first  effect  of  the 
outbreak  of  the  war  was  completely  to  demoralize  the  copper 
market.  In  August,  1914,  the  nominal  quotation  was  12.20 
cents  U,  S.  average,  but  the  few  sales  that  were  effected  vveri. 
in  many  cases  as  low  as  ten,  cents.  This  situation  continued 
for  several  months,  and  it  was  not  until  January.  1915,  that 
the  copper  market  showed  real  signs  of  recovery.  Transactions 
were  then  effected  at  the  market  quotation  of  13.50  cents  per 
pound.  Since  January  the  copper  market  has  been  steadily 
strengthening  until  July,  when  the  market  quotation  rose  to 
19.75  cents,  where  it  remains  at  the  present  time  (August,  1915). 
The  copper  companies  are  now  operating  at  full  capacity,  their 
main  difficulty  being  to  secure  adequate  steamship  facilities  for 
the  transportation  of  their  product.  Freight  rates  for  copper 
bars  have  risen  from  $8.75  per  ton  in  July,  1914,  to  $12.50  per 
ton  in  July,  1915.    The  extent  to  which  copper  production  was 


COMMERCIAL  AND  INDUSTRIAL  SITUATION  35 

curtailed  imine'liately  after  the  outbreak  of  the  war  is  readily 
seen  when  we  compare  the  production  of  1913  with  lyii. 

COPPER  PRODUCTION 

Long  Tons  (2^40  lbs.) 

Fine  Copper  19IJ  1914 

In  bars   20,039  23,134 

'n  matte   4,396  670 

In  ore   2,893  1.266 

27,326  25,070 

Much  of  the  '-urtailment  was  due  to  the  lack  of  shipping  facili- 
ties. At  the  present  time  the  production  has  returned  to  normal, 
and  with  the  increase  of  means  of  transportation  it  is  evident 
that  the  output  soon  will  be  largely  increased. 

Silver 

The  condition  of  the  silver  market  during  the  three  years 
1012-1915  has  been  e.xceedingly  unsatisfactory,  but  as  Peru 
exports  only  between  $150,000  and  $250,000  of  this  metal  an- 
nually (19i;}— $232,103;  1014— $167,610).  the  effect  on  gen- 
eral industrial  conditions  has  been  hardly  noticeable. 

Piirolcum 

The  increasing  output  of  petroleum  promises  to  be  an  im- 
portant factor  in  bringing  about  a  new  era  of  prosperity  in 
Peru.    In  1914  Peru's  export  was  as  follows: 

Tons  Value 

Benzine    28,759  $2,989,848 

Gasoline   885  132,111 

Crude  petroleum  107,536  1,202,681 

Total  137,180  $4,324,640 

Rubber 

The  production  of  rubber,  which  has  been  the  great  staple 
product  of  the  Amazon  region  of  Peru,  has  been  passing  through 
a  severe  crisis  during  the  last  few  years.    This  has  been  due 


36 


THE  EARLY   EFFECltf  OF  THE   WAR   UPON   PERU 


largely  to  the  fact  that  the  cultivated  rubber  of  the  Far  East, 
with  its  larger  product  per  tree,  lias  been  gradually  crowding 
out  the  cruder  methods  of  production  used  in  South  America. 
The  relation  between  the  production  of  plantation  rubber  and 
the  cruder  methods  of  production  prevailing  in  South  America 
is  shown  in  the  following  table : 

PRODUCTION'  IN  METRIC  TONS 

Plantation  Jungle  Rubber  Total 

1905   145  60,800  60.945 

1906   510  65,500  66,010 

1907  1.000  68,000  69,000 

1908  1,800  63200  65,000 

1909  .5,600  65,400  69,000 

1910  8.200  61,800  70,000 

1911   14,100  61,900  76,000 

1912   28,500  70,500  99,000 

1913   42  000  73,000  115,000 

1914  64.000  60,000  124,000 

Within  a  comparatively  few  years  cultivated  rubber  will  prob- 
ably completely  displace  the  jungle  product. 

The  rapid  decline  in  price  from  1911  to  1914  made  the  situa- 
tion more  acute  than  it  had  been  for  many  years,  and  brought 
about  marked  stagnation  in  the  rubber  industry.  While  the 
rise  in  price  since  the  outbreak  of  the  European  war  would, 
under  ordinary  circumstances,  have  had  a  stimulating  effect  on 
this  industry,  the  lack  of  adequate  means  of  transportation  has 
prevented  Peru  from  securing  the  full  benefit  of  this  rise.  Not 
only  have  the  freight  charges  from  Callao  to  Liverpool  become 
almost  prohibitive,  but  there  has  been  such  a  lack  of  available 
bottoms  that  it  has  been  impossible  to  ship  the  accumulated  stock. 

Imports  of  articles  manufactured  from  rubber  to  Peru  and 
exports  of  crude  rubber  from  Peru  in  1914  are  as  follows: 


IMPORTS 


Rubber  and  manufactured  elastic  gums.. 
Ordinary  and  dressing  rubber  combs.... 


Peruvian 

Pounds 

...    7,6.S0 

...     4,212 


11,862 


m 


COMMERCIAL  AND  INDUSTRIAL  SITUATION 
EXPORTS 


Kilos 

White  raw  rubber  13..W2 

White  raw  rubber,  in  planks  39.968 

Rubbfr   681,227 

Low  grand  Putumayo   285,260 

Sernamhy  raw  rubber  1,118,016 

Sernamby  rubber  134.221 

2^2,084 


£p 


87 


Value 

1, 628. H  S.I 

4.985. 3. 5») 

172,184.5.17 

29,288.1  58 

214,ai3.4.«)6 

23.671.3.71 


£p.  445,791. 7. 51 


CHAPTER  V 

Effect  of  the  War  on  Wages  and  Labor  Conditions 

It  is  at  first  glance  somewhat  surprising  that  in  spite  of  the 
long  continue<l  industrial  depression  in  Peru,  the  laljorcrs  in  the 
mines  and  in  the  sugar  and  cotton  plantations  have  suffered 
relatively  little.  It  is  true  that  unskilled  and  even  skilled  laU^r 
in  the  cities — especially  in  Lima  and  Callao — has  felt  severely 
the  effects  of  the  crisis,  and  the  records  of  the  "Socicdad  tie 
Hcncficcncia  "  of  Lima  show  that  there  has  existed  widespread 
suffering.  This  has  been  particularly  true  of  the  dock  laborers 
in  Callao,  where,  since  the  outbreak  of  the  war,  there  has  been 
great  scarcity  of  shipping,  resulting  in  a  large  number  of  un- 
ei  yed.  This  lalxjr  is  not  mobile,  and  although  the  sugar 
planters  and  the  great  mining  enterprises  need  additional  men, 
the  wages  in  these  two  industries  are  not  comparable  with  those 
earned  by  the  stevedores,  and  they  are,  therefore,  unwilling  to 
make  the  change. 

The  conditions  in  Lir>a  ■  >■'  Callao  can  not,  therefore,  be  re- 
garded as  typical  of  the  republic. 

The  following  table  will  show  the  number  employed  in  the 
several  industries  during  the  years   11)12  and   l'J13: 

1912 18,000  laborers  employed  in  mining. 

1913 21,000  laborers  employed  in  sugar. 

1913 2,500  in  cotton  and  woolen  mills  of  Lima. 


Labor  Conditions  in  the  Mines 

Immediately  preceding  the  outbreak  of  the  war,  the  price  of 
fine  copper  had  fallen  to  13Ko  cents  per  pound,  and  had  led 
the  principal  companies  to  reduce  their  output.  The  immediate 
effect  of  the  war  was  further  to  emphasize  this  depression,  due 
in  great  part  to  the  paralyzation  of  shipping  facilities.    In  order 

38 


EFFECT  OF  TIIK  WAR  ON   WAC.KS  AND  LABOR  rONniTIONS 


:»!» 


to  understand  the  efTect  on  lalM»r  conditions  '•  must  be  Ixmie 
in  mind  that  the  unskillcil  lalmr  in  the  mines  is  exclusively 
native  In«han,  and  that  the  daily  waRC  under  the  most  favorable 
conditions  does  not  exceed  one  and  one-half  soles  (7J  cents) 
|)er  day.    Tht-sc  laborers  l)elong  to  two  catCKories: 

First.  The  "  enganchados."  These  are  lalM)rers  secured  by 
contractors  who  advance  certain  sums  to  the  laborers  ( from  1<» 
to  r.O  soles,  or  $l.sO  to  $24)  which  enal)les  them  to  transport 
their  families  and  purchase  certain  necessaries  of  life  in  tlic 
cold  "  sierra."  or  mountainous  districts.  These  men  receive 
fiom  r>>*  to  72  cents  per  tlay  and  at  the  end  of  each  month  one- 
third  of  their  monthly  wages  is  deducted  to  repay  the  money 
advanced. 

Second.  The  "  trabajadores  libres  "  or  free  lalM)rers.  to  whom 
no  advances  are  made,  and  who  receive  tne  same  pay  (.")N  to  72 
cents  per  day)  but  from  whose  wages  it  is  not  necessary  to 
make  any  reductions  to  repay  advances. 

Both  classes  of  lalior  receive  free  of  rental  a  house  (or  rather 
hut)  about  twelve  by  seventeen  feet,  to  which  a  small  kitchen 
is  attached.  Supplies  are  purchased  from  company  stores,  which 
are  managed  in  Peru  with  greater  regard  to  the  welfare  of  the 
lalxjrer  than  is  the  case  in  most  other  couiUries.  In  fact,  the 
most  important  of  the  mining  companies — the  Cerro  de  Pasco 
Mining  Company — has  pursued  a  most  enlightened  policy  in  this 
respect,  maintaining  the  necessaries  of  life  at  the  lowest  possible 
price  at  a  t'me  when  falling  exchange  is  increasing  the  cost  of 
living  in  all  parts  of  the  republic. 

All  of  the  companies  have  had  considerable  difficulty  in  secur- 
mg  sufficient  labor,  and  rather  than  lose  their  labor  force  they 
continued  operating,  in  some  cases  even  at  a  loss.  Although 
some  reduction  was  made  in  wages,  such  reduction  did  not 
amount  to  more  than  five  or  ten  cents  in  the  daily  wage.  It 
is  evident  that,  at  best,  a  wage  of  from  58  to  72  cents  keeps 
the  laborer  close  to  the  margin  of  existence.  Furthermore,  the 
companies  feared  losing  their  labor  force  if  any  considerable 
reduction  were  attempted. 


40  THE  EARLY  EFFECTS  OF  THE  WAE  UPON   PERU 

Soon  after  the  outbreak  of  the  war  the  price  of  all  metals, 
and  especially  of  copper,  began  tu  rise  and  the  companies  soon 
began  to  increase  their  labor  force.  At  the  present  writing  •  the 
most  important  ciMnpanies  are  gradually  approaching  full  capac- 
ity. "The  greatest  difficulty  with  which  the  companies  have  to 
contend  is  the  lack  of  adequate  shipping  facilities  for  the  market- 
ing  of  their  product.  As  sorn  as  this  obstacle  is  overcome  the 
companies  will  be  working  at  the  fullest  possible  capacity. 

With  the  improvement  of  conditions  the  miners  have  again 
secured  their  normal  wage  of  one  and  one-half  soles  (72  cents) 
and  the  companies  are  now  looking  for  additional  labor.  It  is 
not  likely,  however,  that  the  improved  market  conditions  will 
lead  to  a  rapid  rise  in  wages,  owing  to  the  lack  of  organization 
of  the  laboring  population.  In  fact,  a  few  years  ago  the  leading 
mining  companies  reached  an  understanding  by  which  they  are 
to  refrain  from  competing  with  one  another  for  labor  and  under 
which  a  scale  of  wages  was  agreed  upon. 

Although  the  wage  of  the  unskilled  laborer  is  exceedingly 
low,  the  most  important  of  the  mining  companies '  has  adopted 
a  liberal  policy  in  caring  for  its  laborers.  Improved  housing 
facilities  have  been  provided,  also  adequate  and  gratuitous 
medical  service,  and  the  company  stores  managed  for  the  benefit 
of  the  laborer  rather  than  with  a  view  to  profit  The  scale  of 
wages  in  the  copper  mines  is  as  follows : 

Per  Day 

Soles  Dollars 

M'ner       1.20  to  1.50  0.58ti,^72 

Helper    1       to  1.20  0.48  to     -8 

Timbcrman    J.SO  l.t)8 

Timbcrman  helper  2.00  0.96 

Mechanic    3.50  1.68 

Motorman    5.00  2.40 

Blacksmith    3.00  1.44 

In  the  smelters  the  average  wage  is  considerably  higher,  being 
at  least  2%  soles  or  $1.20  per  day. 

'August.  1915. 

*  Ccrro  de  Pasco  Mining  Company. 


EFFECT  OF  THE  WAR  ON  WAGES  AND  LABOR  CONDITIONS 


41 


Wages  on  Sugar  Plantations  Afff.cted  bv  the  War 

Although  the  war  has  had  a  marked  effect  oii  the  sugar  in- 
dustry, inaugurating  a  period  of  high  prices  and  relative  pros- 
perity, the  lalM»rers  have  failed  to  derive  any  real  profit  there- 
from.  The  labi)r  system  on  the  sugar  plantations  is  almost  ex- 
clusively one  of  "  ciiganchados,"  i.c*.,  lalxirers  who  are  brought 
together  by  contractors  who  advance  to  thcni  funds  necessary 
for  their  equipment.  The  laborers  are  theicl)y  obligated  to  re- 
pay these  advances  through  the  assignment  of  a  certain  per- 
centage of  their  daily  wage.  It  is  evident  that  this  system  is 
one  that  lends  itself  to  very  great  abuse  and  it  has  rc(iuired 
great  vigilance  on  the  part  of  the  government  to  prevent  such 
abuses.  Nevertlieless  the  abolition  of  the  system  would  mean  a 
real  advance  in  the  status  of  the  lalxiring  population. 

Owing  to  the  fact  that  employment  on  the  sugar  plantations 
is  intermittent,  it  is  necessary  at  certain  seasons  of  tiie  year  to 
transport  large  numbers  of  laborers  to  the  plamations.  The 
usual  |)lan  is  to  pay  them  from  6o  centavos  (2!>  rents)  to  one 
sol  (4S  cents)  per  day,  and  to  allow  to  each  family  a  ration  «)f 
two  pounds  of  rice  and  one  pound  of  meat  per  day.  In  addition 
the  lal)orers  are  housed  free  of  charge. 

Although  at  the  present  moment '  the  sugar  planters  are 
reaping  large  profits,  the  situation  of  the  plantation  laborer 
shows  no  sign  of  improvement,  unless  n  be  the  tact  that  his 
ration  today  represents  greater  value  than  before  the  war  owing 
to  the  rise  in  price  of  the  necessaries  of  life. 

Cotton  Plantation  Labor  as  Affected  by  the  War 

Smce  the  outbreak  of  the  war  the  cotton  raising  industry 
has  jeen  in  a  condition  of  marked  depression.  The  closing  of 
many  European  mills  led  to  a  violent  decline  in  price,  and  the 
lack  of  shipping  facilities  made  it  practically  impossible  to 
market  the  product  even  at  these  low  prices.     Fortunately,  the 

'  August,  1915. 


42 


THE    KARLY    EFFECTS  OF   THE    WAR    UPON    PERU 


local  cotton  factories  have  been  able  to  use  a  considerable  por- 
tion of  the  product. 

In  spite  of  the  gradual  increase  in  the  price  of  raw  cotton 
the  high  prevailing  freight  rates  have  made  it  extremely  difficult 
to  market  the  product  in  Europe.  In  spite  of  this  depressed 
condition,  however,  the  wages  of  labor  on  the  cotton  plantations 
have  suffered  no  decline.  This  is  due  in  large  part  to  the  in- 
creasing demand  for  labor  on  the  sugar  estates.  Furthermore, 
owing  to  the  fact  that  employment  on  the  cotton  plantations  is 
more  intermittent  than  on  the  sugar  estates,  the  rate  of  wages 
IS  higher,  ranging  from  one  sol.  20  centavos  (58  cents)  to  one 
sol,  50  centavos  (72  cents)  per  day. 


CHAPTER  VI 
Effect  of  the  War  on  International  Trade 


The  imports  into  Peru  during  the  five  years  preceding  the 
outbreak  of  the  European  war  are  shown  in  the  accompanying 
table.  When  compared  with  the  exports  it  will  be  seen  that 
the  balance  of  trade  has  been  steadily  favorable  to  Peru : ' 

Year  Imports  Exports 

1909    $20,891,327  $31,554,382 

1910  24,206.187  34,380,009 

1911  26.484.257  36,145271 

1912  25,027,814  45,871,504 

1913  29,591.451  44.409.610 

During  the  last  six  months  of  1914  and  the  first  six  months 
of  1915  both  imports  and  exports  suffered  a  severe  decline. 

Until  the  commercial  depression,  which  began  to  make  its 
full  effect  apparent  in  1913,  the  exports  of  Peru  to  the  United 
States  increased  with  great  rapidity.  In  1913  the  export  trade 
suffered  a  severe  setback,  due  in  the  main  to  the  unfavorable 
condition  of  the  rubber,  sugar  and  copper  markets.  With  the 
outbreak  of  the  war  the  export  trade  was  temporarily  paralyzed, 
although  it  began  to  recover  toward  the  end  of  1914,  and  was 
well  on  toward  normal  conditions  during  the  early  months  of 
1915.  The  distribution  of  Peruvian  exports  amongst  the  lead- 
ing countries  is  as  follows: 

DISTRIBUTION  OF  EXPORTS 

1911  1912  1913  1914 

United  States  $10,187,997  $17,495,279  $14,741,839  $14,807,895 

United  Kingdom    12,017.921  13,734.561  16.539.110  15,912,116 

Chile    6,332,381  5.157.534  5,847,1.39  6231200 

Germany    2,776,765  3,205,496  2,963,884  1,598.804 

'  Report  of  Wm.  W.  Handley,  United  States  Consul  General  at  Callao, 
Peril. 

43 


44 


THE  EAKLY  EFFECTS  OF  THE  WAR  UPON   PERU 


Early  in  1915  the  export  trade  began  to  improve,  due  to  the 
worldwide  demand  for  sugar  and  copper. 

The  situation  during  the  latter  part  of  1014,  which  is  the 
most  recent  period  for  which  figures  are  available,  shows  clearly 
the  effect  of  the  war  on  Peruvian  exports.  The  exports  *  to 
the  United  States  during  the  last  five  months  of  1914,  as  com- 
pared with  the  similar  period  of  1913,  were  as  follows: 

EXPORTS  FROM  PERU  TO  THE  UNITED  STATES 

1913  1914 

August   $668,439  $1,263,275 

September    962,735  752,873 

October    1,064,853  765^31 

November   1,111,482  999,594 

December   1,164,345  841,153 

The  principal  articles  of  export,  and  the  amounts  shipped 
each  year  were  as  follows : 


PRINCIPAL  EXPORTS 

1912                    1913  1914 

Cotton  $5,075,110           $6,912,529  $7,026,090 

Sugar   6,784,505              6,717,039  13,204,745 

Rubber    6,365,508              3.970,159  2228,945 

Straw  hats    2,105,358                577,828  255,810 

Wool  (alpaca)    1,037,042              1,573,681  1,762.225 

Copper    8,413,415  7,151,785 

Similarly,  the  effect  of  the  war  on  Peri'.'s  import  trade  can 

be  followed.     The  distribution  of  this  trade  during  the  years 
1912,  1913  and  1914  was  as  follows: 


DISTRIBUTION  OF  PERU'S  IMPORT  TRADE 

1912  1913  1914 

United  States   $5,763,425  $8,530,523  $7,633,719 

United  Kingdom    6,648,368  7,769,225  6,505,363 

Germany  4,521,729  5,132,039  3,144,434 


'  Otto  Wilson :  "  Forecast  of  Trade  with  South   America,"  U.  S.  bureau 
of  Foreign  and  Domestic  Commerce. 


EFFECT  OF  THE  WAR  ON  INTERNATIONAL  TRADE  45 

During  the  last  five  months  of  1914  the  imports  of  Peru 
from  the  United  States  showed  the  following  decline,  as  com- 
pared with  the  similar  period  of  1913 : 

IMPORTS  OF  PERU  FROM  THE  UNITED  STATES 

1913  1914 

August   $581,766  $500,869 

September    516,320  237,522 

October   575,140  387,588 

November    i89,274  350,780 

December   614,478  552.598 

Imports  from  other  countries  show  even  a  more  marked  de- 
cline. Although  specific  data  are  not  available,  the  indications 
are  that  191. '>  will  show  some  recovery  in  imports,  especially 
from  the  United  States.  There  is  no  lack  of  demand  for  Amer- 
.^.;  -'  'factures,  but  recovery  is  being  delayed  by  reason 
^>;tance  of  the  American  manufacturer  to  adapt  himself 
lo  the  credit  conditions  of  the  Peruvian  market.  This  reluc- 
tance has  been  a  source  of  keen  disappointment  to  the  mer- 
chants of  Peru.  They  have  found  themselves  cut  oflf  from  the 
European  sources  of  supply,  due  primarily  to  the  lack  of  ade- 
quate transportation  facilities  and  to  the  inability  of  tlie  Euro- 
pean manufacturers  to  continue  the  long  term  credits  to  which 
the  Peruvian  manufacturers  have  been  accustomed.  In  this 
emergency  the  business  men  of  Peru  have  turned  to  the  United 
States  for  relief,  hoping  and  confidently  expecting  that  the 
American  manufacturer  would  utilize  the  opportunity  to  dis- 
place his  European  competitor.  The  failure  of  the  American 
manufacturer  to  respond  to  the  emergency  has  not  only  been  a 
source  of  disappointment,  but  has  given  rise  to  widespread  criti- 
cism. An  examination  of  the  situation  will  disclose  that  the 
failure  of  the  American  manufacturer  to  respond  to  the  needs 
of  the  Peruvian  merchant  has  been  due,  in  part,  to  certain 
peculiarities  of  the  industrial  and  financial  organization  of  the 
United  States,  and,  in  part,  to  the  lack  of  those  facilities  for 
credit  information  which  the  European  manufacturer  has  en- 
joyed for  many  years  and  which  were  developed  as  a  result 


46 


THE  EARLY   EFFECTS  OF  THE  WAR  UPON    PERU 


of  long  continued  effort  and  considerable  sacrifice.  The  British 
and  German  manufacturer  has  been  able  to  secure  complete  and 
adequate  credit  information  concerning  every  Peruvian  mer- 
chant through  the  German  and  British  banks  established  in  Lima, 
with  branches  in  most  of  the  important  cities  of  the  country. 
It  is  to  be  noted  in  this  connection  that  the  problem  of  securing 
accurate  information  concerning  the  financial  standing  of  mer- 
chants in  Peru,  as  well  as  the  other  countries  of  South  America, 
is  far  more  difficult  than  in  the  United  States.  Inquiries  con- 
cerning financial  standing  are  resented  by  South  American  mer- 
chants as  an  intrusion  upon  their  private  affairs,  and  it  is, 
therefore,  impossible  for  an  ordinary  commercial  agency  to 
secure  in  a  short  time  the  information  needed  by  American  man- 
ufacturers as  a  basis  for  the  extension  of  long  term  credits. 
This  information  can  best  be  gathered  through  the  commercial 
departments  of  well  organized  banking  institutions.  Not  only 
will  such  banks  be  in  a  position  to  furnish  the  American  manu- 
facturer with  the  needed  information,  but  they  can  perform  the 
further  service  of  discounting  the  notes  of  Peruvian  merchants, 
given  in  payment  of  the  purchases  of  American  products.  In 
other  words,  the  present  situation  demands  the  development 
of  new  ?r.  ancial  machinery  which  will  enable  the  American  man- 
ufacturer to  offer  to  the  Peruvian  merchant  the  same  facilities 
which  he  has  heretofore  enjoyed  in  Great  Britain,  Germany  and 
the  other  countries  of  Europe. 

It  is  evident  from  the  foregoing  discussion  that  one  of  the 
great  needs  of  the  present  moment  is  the  establishment  of  Amer- 
ican banks  with  an  organization  adequate  and  capital  sufficient 
to  meet  the  needs  of  the  present  situation.  The  emphasis  on 
capital  investment  is  important  because  of  the  fact  that  the 
industrial  and  social  progress  of  the  country  is  dependent  almost 
ex  '  aively  on  foreign  capital.  The  rate  of  wages  of  the  labor- 
ing classes  is  so  low  that  there  is  little  or  no  saving  on  their 
part.  Furthermore,  the  addition  to  the  nation's  working  capital 
through  the  savings  of  the  middle  classes  is  also  comparatively 
small.    The  question  of  increased  working  capital  for  the  coun- 


EFFECT  OF  THE  WAR  ON   INTERNATIONAL  TRADE 


47 


try  is,  therefore,  a  matter  of  vital  importance,  and  any  American 
bank  which  is  to  perform  the  services  of  which  the  country 
stands  in  need  must  be  prepared  to  make  a  considerable  capital 
investment  in  the  country.  A  start  in  this  direction  has  been 
made  through  the  establishment  of  one  American  bank  in  Lima. 
This  will  be  followed  by  other  institutions,  thus  building  up  in 
Peru  a  financial  organization  equal  to  that  enjoyed  at  the  present 
time  by  the  manufacturers  of  Great  Britain  and  Germany. 

Effect  of  the  War  on  Transportation  Facilities 

In  no  department  of  the  commercial  life  of  Peru  has  the  effect 
of  the  European  war  been  felt  with  greater  violence  than  in 
the  facilities  for  the  transportation  of  the  leading  national 
products — minerals,  sugar,  cotton — to  the  markets  of  Europe 
and  the  United  States.  It  is  safe  to  say  that  had  Peru  enjoyed 
adequate  transportation  facilities  at  reasonable  rates,  since  the 
outbreak  of  the  war,  she  would  have  been  able  to  extricate  her- 
self from  the  disastrous  depression  which  has  hung  as  a  cloud 
over  the  country.  With  the  advance  in  price  of  the  staples — 
copper  and  sugar — Peru  has  found  herself  confronted  not  only 
with  rapidly  advancing  ight  rates  but  with  such  a  scarcity 
of  available  bottoms  ti  ~  marketing  of  her  prodncts  has 

become  exceedingly  difficult 

As  regards  freight  rates,  it  is  only  necessary  to  note  the  con- 
trast between  the  rates  of  July,  l!tl4,  and  July,  l!)!.'),  to  appre- 
ciate the  situation.  Owing  to  tlie  greater  risks  of  navigation 
the  rates  from  Callao  to  Europe  have  advanced  to  a  far  greater 
extent  than  those  from  Callao  to  New  York  and  even  at  the 
rates  quoted  it  has  at  times  been  exceedingly  difficult  to  secure 
lx)ttoms  for  shipments.  The  advance  in  rates  from  Callao  to 
New  York  via  Panama  from  the  period  immediately  preceding 
the  war  to  the  present  has  been  as  follows : 


48 


THE  EARLY  EFFECTS  OF  THE  WAR  UPON   PERU 


CALLAO  TO  NEW  YORK  VIA  PANAMA 


Per 


July,  1914 
Toi 


Ton  of  2,240  lbs. 

Sugar 18.10 

Copper  in  ban 8.75 

Cotton  23.75 

Hides 25.00 

Wool  23.75 

Ores*  1375 


Per 


July,  1915 
Te 


on  of  2,240  Ibt. 
>$12J0 

12i0 
K  30.00 

30.00 
0  30.00 

15.00 


CALLAO  TO  LIVERPOOL  (VIA  MAGELLAN) 

Sugar   il.10.0  •£4.0.0 

Copper  bars   (Open  rate.   All  copper  from  Peru  going  to  United  States) 

Cotton  4.15.0  '10.0.0 


Hides  (dry) 
Hides  (wet) 

Wool  

Ores    


4.15.0 
3.15.0 
4.10.0 

1.10.0  (up  to  value  of 
ilO  per  ton) 


9.0.0 
•  12.0.0 
4.0.0  (up  to  value  of 
£25  per  ton) 


■Although  this  is  the  published  rate  the  companies  are  asking  as  high  as 
$15. 
i>  Although  this  is  the  published  rate  the  companies  are  asking  as  high  as 

■^Although  this  is  the  published  rate  the  companies  are  asking  as  high  as 
$40. 

<>  Up  to  value  of  $125  per  ton. 

•Although  this  is  the  published  rate  the  companies  have  been  asking  as 
high  as  i5. 10.0. 

'Although  this  is  the  published  rate  the  companies  have  been  asking  as 
high  as  £12.0.0. 

'Although  this  is  the  published  rate  the  companies  have  been  asking  as 
high  as  il4.0.a 


APPENDICES 


APPENDIX  A 
Trade  with  United  Sutet 

IMPORTS  OF  MERCHANDISE  FROM  PERU* 


Articin 


Articles   th«  growth,   produce  or  manufac- 
ture of  the  Onited  Statei,  returnetl 

(free)    

Art   worki   (free)    

Chemicals,     drugs,     dyes     and     medicine* 

(free)    

Chemicals,     drugs,     dyes     and     medicines 

(dut.)     

Coke,  tons  (free)    

Copper,  and  manufactures  of — 

Ore,    matte    and    rcRulus    (copper    con* 

tents);  lbs.   (free)    

Pigs,    ingots,    bars,    plates    and    old,    lbs. 

(free)     

Cotton,   unmanufactured,   lbs.    (free) 

Kertiliiers:  Guano,  tons   (free) 

Hats,    bonnets    and     huods,    composed    of 

straw,   chip,   rtc.    (dut.) 

Materials  for   (dut. ) 

Hides   and   skins    (except    fur   skinv),    lbs. 

(free)    

Household  and  personal  effects    (free).... 

India   ruhber,  crude,   lbs.    (free) 

Iron^  and  steel,  manufactures  nf — 
Wire,  and  articles  made  from    (ilut.)... 

Ivory,    vegetable,    lbs.    (free) 

Minerals,  crude   (free) 

Oils:   Mineral — 

Crude,   gals,    (free) 

Refined,  gals.    ( free) 

Paper,  and  m.inuf.ictnres  ()f;   Books,  music, 

maps.   etc.    (dut. ) 

Sugar  cane,   lbs.    (dut.) 

Vegetables:    Deans,   bush,    (dut.) 

WonI : 

Unmanufactured,   Ihs.    (free) 

"      (dut.) 

Hair  of  the  Angora  goat,  etc.,  unmanu- 
factured,   lbs.     (dut. ) 

All  other  free  and  dutiable  articles 


Quantities 


Values 


1013 


10,837,8(11 


11)14 


MM 


1013 


$3l»,«Wi4 

1,62:: 

2,.'i(tN 

7!»,77N 


40,2in,finn  4fl,S03,222 
4,871,n;i.->>  0,4ns,04(l 
7,380 


10,822,341]  1,741,400 

4 


807,234 
3fl2.'347 


470,47r> 


10,7.10.715 

0,370,2H(I 


034.803 
i. 016,500 


034,18(1 


13,072,210 


032,550 


Total   free  of  duty. 
Total  dutiable   


Total  imports  of  merchandise. 


12,111,042 


8.981. 0S41 
7,038j 

lfl4.1I>0| 

244,Oi:i; 

700,327, 


778.842 

841.0S4 

74,800 

BO,778 
1.514 

2.'iO,3:io 

3.21.-. 
303,202 

5.078 

18.045 

»,l»2i 

411.4:t!i 
402.0!m; 

14,00.'-, 
325.013 


202,518 

'  7. mil 


I.808.,3fl0 
708,210 


1014 


$11,251 
216 


600 

81,023 
2.757 


1.017.703 


O..'.07.40n 
Lit  1.3(18 


07.782 


203,837 

3.537 

427,002 


15.410 
120 

,500.5.35 
807,020 


181,510 
1S,301 

40.054 
77,024 

234.570 

8,o(m 


$9.600.570|$12.175,723 


$11,502.48(1 
073,237 


•  "Trade  of  the  I'nited   States  with   Other  American  Countries,   1913-1014,"  U.    S. 
Bureau  of  Foreign  and  Domestic  Commerce. 

51 


M 


APPENDICES 


EXPORTS  OF  MERCII.  VDtSE  TO  PERU* 


ArtkiM 


Abrttiv*^- 

VVhrcIt,  emery,  tnd  olktr 

All  other 

AiricullurtI  implciaciilt,  and  ptrti  of — 

riuwi  ind  cuUlvalort  

All  other    

Animals — 

Cattle   (No.)    

All   other    

Aibettoe,  manufacturei  of   

Ainhattuin.  manufacture!  of  

Athletic  and  afiorting  gooda   

Bahhitt  metal  <lba.)   

Blacking    

BraM,  manufacturea  of   

Brradituffa — 

Bread  and  hincuit  (Iha.)   

Oatmeal    (Ibt.)    

Prrparalions  of,  for  table  food   

Wheal    (bu»h.)    

Wheat  flour  (bblt.)   

Broom  corn,  manufacturea  of 

Bruahet    

Can,   carriagea,   other   vehiclea,  and   parts 
of — 
Automobile!,  and  part!  of — 

Automobile!,  paascngcr  (No.)    

Part!  of   

Carriages   (No.)    

Cars,  passenner  and  freight — 

For  steam   railways   

For  other   railway!    

nicycles,  tricycle!,  etc 

W'agnns    (No.)    

Wheelbarrows,       pushcarts       and      hand 

trucks    

All   other    

Cement,  hydraulic   (bbls.)    

Chemicals,  drugs,  dyei  and  medicine! — 

Acids   

Calcium  carbide  (lbs.)    

Medicines,  patent  or  proprietary 

All   other    

Clocks  and  watches,  and  parts  of  

Coal,  bituminous   (tons)    

Confectionery    

Copper,  and  manufactures  of 

Cotton,  manufactures  of — 
Cloths- 
Unbleached   (yds.)    

Bleached   (yds.)    

Colored    (yds.)    

Waste,  cotton   (Iba.)    

Wearing  apparel — 

Corsets    

Knit  gooda 

All  other   

All  other   


Quantities 


1013 


40 


in,44T 


lOU 


42 


3S,112 


72,022 

i>n.oio 


ino,.'U)n 

1)4.343 


70 


34 


18 


U2.083 


340,740 


0,200 


1,000,BS4 

200,476 

SSB,487 

28,446 


19,818 
27,688 


21,4.1.1 
118.1B0 


36 


10 


60 


77,023 


682,200 


06 


1,181  .S04 

i«n.s40 

594,334 
404 


ValuM 


ISIS 


tl,R28 
B.(H)3 

43,0fl3 
16,319 

1.74B 
BAB 
1,901 
8,163 
1,717 
2.116 
6.001 
13,027 

.,444 

1,22B 
9,096 

l6.n,.tno 
374,ono 

11.172 
1,319 


B.%,646 
2,.'11M) 
B.270 

08.40.1 

80.nn4 

1.670 

2,036 

0.306 

1,317 

123,177 

3.0.19 

12,2.18 

100.58S 

83,461 

.I.MO 
27.636 

8,404 
65,75S 


68,710 

14.602 

42.072 

1,631 

10.327 
11.196 
34,678 
1S025 


IS14 


tl.043 
3,140 

68,963 
18.687 

4,300 
3,70? 
4,337 
300 
S,B4S 
4,940 
4.B26 
0.660 

1,778 

1.446 

8,627 

19,729 

464,946 

B,46« 

07T 


81.863 
5,083 
1,400 

22,885 

110,518 

1.600 

5.568 

7,079 

7,8.10 

100,002 

4,782 

22.787 

197,320 

8,1.433 

2,031 

433 

6,108 

35,0.14 


76.253 

14.999 

47,218 

36 

4,949 
11,105 
40,075 
20,634 


■  "Trade  of  United  Sutes  with  Ot'    '  American  Countrlct,   1013-1014." 


APPENDICES 
EXP  'RT8  or  MERCHANDISE  TO  PERU-CMt<iM«Mf 


6S 


Aftkim 


Dental  loodi  

Earthen,  tlonc  and  china  war* — 

Bricki— 

Buildinf    (H.)    

Fir*    (M.)    

Earthen  and  alona  war*   

All   other    

Electrical  machinery,  appliance!  and  initru- 
menti*— 

Dynamui,   or  |cneralor<    

Intulalcd  wire  and  rabic*  

Lampi — 

Are   (No.)    

hicandncent — 

Carbon  filament  (No.)    

MeUl  filament   (No.)    

Motor!    

Sialic  tranafoimeri   

Telephonet    

All  other    

Exnlouvei — 

Cartridf rs  

Dynamilc   (Ibf.)    

All   other    

Fibers,     vegetable,     and     textile     grauct, 
manufacturet  of — 

Cordage  flbr)    

Twine    

Fire  exlinguiahera   

Fish- 
Salmon,  canned   (Ihi. )    

Canned    fith    (except    lalmon    and    ihell- 
fiih)    

Shcllfiah    

Iruits — 

Apricoti,  dried   (lbs.)    

Peaches,   dried    (lbs. )    

Prunes  (lbs.)    

All  other,  green,   ripe,  or  dried 

Prepared  or  preserved    

Furniture  of  metal   

Furs  and  fur  skins,  dressed,  etc 

Glass  and  glassware — 

Bottles,    vials,    demijohns,    cartjoys    and 
jars    

All    ottier    

Crease,  lubricating  

Household  and  personal  effects   

India  rubber,  manufactures  of — 

Belting     

Roots  and  shoes  (pairs)    

Tires    

All   other    

Ink 


Instruments    and    apparatus    for    scientific 

purposes    

Iron  and  steel,  and  manufactures  of — 

Pig  iron   (tons)    

Bars  or  rods  of  steel   (lbs.)    

Bolts    nuts  and  washers  (lb*.)   

Builders*  hardware — 

Locks    , 

Hinges,  and  other   

Car  wheels   (No.)    

Castings,    n.e.s 

Cutlery    


Ottantities 


lOtl 


800 
IttW 


49 

87.010 
B3,UIN 


1914 


U4 


80 


2«,B75 
2U.024 


108,S0*I       H10,INI4 


934,010 


S13.311 


e4H,<(ll 


301,374 


22,3S4 
24,100 
4U,.135 


10,3K0 

:{.'>,4i.'> 


l.OJSO 


2fl2 

2,446,301 

18e,423 


474 


5,10 


140 

;),.">nfl,n»8 

1U0.833 


208 


Valu«* 


1913 


IN.3I0 


2..1«ft 
0,HM) 

n.2«t 

0,772 


lOK.Min 


giM) 
4,n3« 

10.801 

N,'I,28H 


2,IN)«t 
1)10.224 

.14.061 
ll.N2.'i 
17. 903 


4.603 
260 

34.120 

2.208 
17,14.'. 

2.441 
1  .«.'>» 
.•t.087 
2.4BH 
12.1.V 
1.21" 
2,090 


i.oes 

16.881 

10.207 

1.517 

26,308 
2,810 
4.303 

8.088 

3,r>04 

6,403 

r.,47S 

41,800 

6,508 

10,222 
44,243 

8,239 
10,624 

7,508 


1914 


tT.lSS 


16.771 
H..in3 
3.011 


12.081 
;'3,4INI 

641 

3,847 
4,186 
68.350 
8,532 
5.079 
118,333 

17.508 
56.284 
26,221 


56,800 
4,683 
1.585 

19.001 

1.243 

8.057 

1  ..-(OS 
1.041 
2.668 
2.1)08 
7.30O 
4,026 
3,396 


218 
18.768 
24.351 

8,245 

26,010 
2.1.59 
7.427 
7,650 
3,614 

12,353 

2.470 

63.254 

8,366 

10.599 
37.925 

1.818 
25,326 

7,339 


RXPORTS  or  MERCHANDI    i    TO  PERU— ComimMrf 


Anictn 


Knamvl  warr — 

Lavtiorin  and  linkt 

All  other 

Firrarmt    

MKhincry,   michinra  and  parti  of— 

Air-comprcuJHg   machinrry    

Caih  rcgiilrrt  (No.)   

Cutton  f in«   ( No. )    

Elcvatnrft.   and  cirvator   machinery... 
Efifinrn.  and  part«  nf — 

EIrclric   liKnnKrtivet    (No.)    

Internal  cumbuiion — gaiollnc — 

Marine    ( No. )    

.>^tafii>nary    (No.)    

Traction   (No.)    

Steam — 

l,iK-nniotlvni    ( No. )    

Marine   (.So.)    

Stationary    ( No  )    

All  other    (.No.)    

I*art»  of    

Tjiunilry   tn.ichinery    

Mrtal  workind  machinery   

MilhhK  machinery    (flour  ami   grittl.. 

Miniiifi    machntery    

F*rtiiting  prmwii    

Pumps,    and   pumping   machinery 

RefriKrratinit    machinery    

SewiiiK    tnachini-H 

.Sugar  mill   machinrry    

Textile   machinery      

Tyite*ettinR     ni.uliin.-s,     linotype     and 

olhe^j      

Typewriting  machines  

Windmi'1^    

Wiiodworkin.,  m-ichinery — 

Sawiiul'    machinery    

All    other    

All  lather  machinery,  and  parts  of... 
Nailfi   ;tnd   spiken — 

Hailrnad   npikcs   (lbs.)    

Wire    (lh«.)     

P'r-es  and  littingA  ( Iht. )   

Kail*  for  railways   (tons)    

Railway   track   material,  etc.,  except   rails 

and    spikes    

Safes  (No.)    

Scales  and  balances   

Sheets  anii  plates- - 

Iron,  galvanized  (lbs.)    , 

Steel- 
Plates    (lbs.)    

Sheets    (lb«  I    

Stoves,  ranges,  and  parts  of  

Structural   iron  and  steel    (tons) 

Tin    plates,    terneplatcs.    ;ind    taggers    tin 

(lbs.)     

Tools- 
Axes   (No.)    

Hammers  and  hatchets   

Saws    

Shovels  and  spades    

All    other    


•>I3 


1914 


Valtim 


If 


l«0..1.'i,>. 

8rt7.7Hi) 


i">l),7(MV 
S(MI.4U!> 

0,7!»;i.U»; 
»,H4t) 


4,4n.'.,:i7.%  i..-i7.\nn« 


i.28!>,oni> 

l!..M4,7n.-, 


4'''i,207 
■..l>!t.-.,7L'.1 


.'illK 

fi.'.O.ROI 

I.'i.S.'ili 


657 

346,02.') 

24,n2S 


ll»t.l 


IBM 


IH.TU 

l,(«7N 
22. 1  HO 

2.B14 
1,(171 

2:«.in7 

l.'(,.10» 
1,030 

7.n47 

'  M  "l 

'    :i! 

nlt..'i4<> 

i.irm 

17,4.'«l 
7.o:(i 

3!).:t_ 
:!.i:n 

40,» 
1,4(14 

2.'i«,87<> 

I4,:i3f> 

61.47:t 

ti,:t7s 

07.334 

20..')31 

l,fl03 

s.ni.'. 
e7,ri7»< 

4,1)24 

n.:i3n 
«.i:i3 

132.IU11I] 

3.n:iiI 
2-'.n.-i4: 

l.%2.ll.V.! 
ISl,,',,-.:!: 

«r,74«| 

2,4fi:i| 
14,4  MO  j 

131.3.-2 

24.!1K«' 

(ll,tMll'[ 

4.!HI4' 

2.'«..1!>3 

2.'i.2(M; 

1.V4T1 
3.(Mil 

r«,(tsi 

2,407 
S«,70S 


17,774 

2.230 

14,433 

10,710 
8,Mft 

it,a»!; 


I4,ii.in 

12,02.1 
0,060 

M,US 


2.3.tO 

3,390 
71,1.'V8 

l,ll.12 
3n,2tM 

2,llta 
300,202 
13,702 
43,II!>H 
30,181 
136,193 
10,(M>4 


2.'S.00H 

40..IIB 

3,764 

.3,in5 

.■M>,2S<» 
14(>.SN8 

l.r..-2 

lS.!l.-)2 

HI2.2H3 

141.320 

r>i.4Nf< 

.'i.OH.'i 

1N,N.')5 

4n,.''.;i!> 

0.441 
I.IN.SKI 

4.ii:iii 

Sl.S'.lS 
12.!183 

10,249 
4,233 
4,409 
r>.ltl4 

00.212 


EXPORTH  I 


APPENDICES 
MERCHANDISt:  TO  PKHV -Co»$inut4 


M 


Artie  In 


Wirr    iiiil  m«nu(Klurti  of 
\S  irc— 

Hsrbrtt    (Ibt.)    

All  uihcr    (ibi.) 
Manufarlurrt   of  — 
V\'(ivrn-wirc   fencing 

All   oihrr    

All  uihcr  manudclurci  uf 
U*myt,  chjtnUrlw-r*,  etc.   (rjtccpl  electric) 
i.eii>r,  manufActurrs  t>f 
Ltalhcr,  and  fnanufacturra  of — 
Lcalhir  an<l  unnid  ikint — 

K<lting     

I'»itrit    

L'p:.ft  — 

I. .If     (Kl.      ft.)      

Glairil   kid    (h|.    ft.)    

All    other 
Mantilacturrt  of — 
Bot'(*  anil  ahtNf* — 
Cliildrcn'a    l|>airt) 
Men's   (pairs) 
\\iimen's   (pairs) 

Harnrss  and  laddlts   

All    "ther    

Malt   (bush.)    

Meal  and  dairy  product*^ 
Meat  products — 
Iket  proilucts — 

Kiel,   canned    (lbs.)    

Heel,  pickled  and  other  cured  (Iba.) 

Tallow     (Iba.) 

Hob  products   - 

Bacon    (lbs.) 

Hama  and  shoulders,  cured    (lbs.).. 

Urd    

Pork,   pickled    

Lard  com|iound»  and  other  substitutes 

f,.r  lard  (lbs.)    

Saus.-iKc    (lbs.)    

All  other  meat  pr"il\«li 

Canned    

All  other    

Dairy  product.s- 

nutter    Obi.)    

Cheese   (lbs.)    

Milk.  conil.MM.I    (lbs.)    

Motor    iKiats    (N...I     

Musical    instrununi^   and  parts  o{— 

1'l.iycf    itianos  (Ni».)    

All   other    (N". )       

All   other,   ail. I   p.irU  of    

Naval  stores — 

Rosm    (bhis.)     

Turpentine,    spts.    of    (gals)    

Oilcloth     

Oils- 
Mineral,  refintl  or  manufactured— 
lllunimating    (gals.) 
Lubricating     and     heavy     paraffin     oil 

(gals.)    

Naphthas,  etc.— Gaaoline   (gala.)    

Residuum,  etc. — 

(;as  nil  and   fuel  oil   (gals.)    

All  oth.  r  (gals. )    

Vegetable    


.1,210  «,<>4» 

4t).(l7H<         »fl,*<l3 

6,IW2  lO.eiB 


10.74H 


N,u:ii! 


122.4771  :I7.I41 

n».140;  2(i.:iltM 

209,24g{  I52.:t64i 

n.'.T.N  47.lltli 

ti4.,'.7,'Vi  «l,:mrt 

4,022,077  3.WM.7II1 

IMMHt  22,423 


51)1.1.1,1 
IS^tOO 


104.1112 
1H,72I> 


n.l)7*>  0.710 

10.17 »  0.4NS 

322  40;.'  .i:iO.N47 

8 


4, 
14 


8,27«'  3.4731 

42„17r.  34.H7.-, 


39.i.r.Mo 

2.17.700 
3.170 


73.H26 


312.044 
i;;.!423 


7.1.17.1SO I 

5,108.367  IH.K.17.«.-,2: 


1I).01»4 

15,751 

S4.047 

40.7U3 

1,403 

1 
a.dUR 

10.704 

144.ti«m 

11  7. SIN) 

1.^77« 

2.-.. .102 

7,.H.1tl 

,1.4  »tH 

OMn, 

4.:ii:i 

II.UKI 

tA  A,Mt 

>t.o:.'.l 

A  fMka 

I4,02n 

3,31,1 

14,700 

4.000 

l.l>47 

11.515 

2,028 

tl.MN) 

.V>8.043 

Ul)2 

7.605 

l).41t4 

452.543 

2.422 

40,140 
1,'MI2 

17.3.n 
2.047 

4.823 
2,300 

8.382 
1,308 

2.O70 

3.0H4 

24. Mi;: 

U..-.ti2 

2.027 

1,1,17 

311.345 

12,tt44 

2*15 
4,.1T1 
2,424 

2.052 
3.«I)H 
1,!M)1 

r.n,.io7 

-l..'.23 
2.226 

22"n.1 

I7.im« 
i.;i» 

53.100 

.'.0.164 
795 

104.445 

78.734 

7.000 


73.S57 


67,0.19 
3,H12 


258.2,13 
3665 


5G  APPENDICES 

EXPORTS  OF  MERCHANDISE  TO  PKKV— Continued 


Articlet 


Faintt,  pigments,  colora  and  vtniiihc»— 

Dry  color*   

Rnd^-mixed  painti  (fall.)    

Varnish    (gals. )    

All  other  (including  crayons)   

Paper,  manufactures  of — 

Bags    

Books,  music,  maps,  engravings,  etc. . . 

Carbon   paiwr    

Paper  hangings  

Playing  cards    

Printing  paper — 

News  print  (lbs.)   

All  other  (lbs.)  

Wrapping  paper   (lbs.)    

Writing  paper  and  envelopes   

All   other    

Paraffin  and  paraffin  wax  (lbs.)    

Paste 


Pencils   (except  slate)   and  pencil  leads... 
Perfumeries,  cosmetics  and  all  toilet  prep. 

arations     

Phonographs,    graphophoncs,    gramophones. 

ana  records,  and  materials  for 

Photographic  goods — 

Camera?     

Motion  picture  films  (lin.  ft.)    

Other  &L>nsitized  goods   

All  other    

Plated  ware,  except  cutlery  and  jewelry 

RefriRcrators     

Roofing  f*lt  and  similar  materials 

Seeds 


Quantitici 


1918 


1,161 


1914 


9,S87 
907 


826,920 
95..1TH 
24,711 


1,272,844 


63,07,1 


Silk,  manufactures  of  

Soap-  - 

Toilet  or  fancy  

All   other    (lbs.)    

Spirits,   wines,   malt   liquors,    etc. — 

Malt  liquors  in  bottles      (doz.  qts.) 

Whiskey,  rye  (pf.  gals.)    

Wine  (gals.)    

AH    other    

Straw  and  palm  leaf,  manufactures  of.... 
Surgical   appliances    (not   including   instru' 

ments)    

Tin,  manufactures  of   

Toys    

Trunks,  valises  and  traveling  bags 

Type    (lbs.)    

Vegetables — 

Potatoes  (except  sweet)  (bush.) 

Canned    

All   other    

Wood,  manufactures  of — 
Lumber — 

Boards,  planks  and  deals — 

Fir   (M.   ft.)    

Oak    (M.    ft.)    

White  pine  (M.  ft.)    

Yellow  pine — 

Pitch   (M.  ft.)    

All  other  (M.  ft.)    

Poplar   (M.   ft.)    

Redwood  (M.  ft.)   


773,.128 

13S,08n 

11,777 


580,864 


7,260 


486,647 

28,1 
1,207 
1,617 


324,0',I7 

730 
628 
HUlt 


23,160 
512 


46,844 

246 

21 

229 
870 


747 


13.775 
1,438 


58,983 

436 

68 

1,120 

174 

62 

2,132 


Values 


1013 


t6,208 
5,207 
l,32r 
4,112 

4,005 
84,887 
1,251 
1,247 
2,578 

19,419 

4,0.18 

1,450 

20.382: 

13,5HS 

50,266 

148 

3,340 

46.231 


2,872 
l.-l-'U 
0,104! 
4.2im 
8,102 

!•!•:» 

7,604 

4I.H 

1,251 

I 

9,948 

22,61Ui 

4031 
2,5«H 

S-ll 
2,335 
2,177 

20,801 
2,726 
1,244 
2,161 
8,706 

382 

14,536 

413 


602,407 

20,268 

040 

0,108 
15,075 


22,630 


1014 


fS,Bll 
2,355 
1,481 
708 

5,480 
28,006 
1,704 
8,081 
1.849 

18,472 

4,607 

630 

16,068 

11,576 

22,745 

1,261 

3,940 

44,791 


36,180;        17,407 


2,749 
780 
11,544 
1,703 
6.,S43 
.S.912 
8.633 
ltl71 
3,344 

6,868 
15,069 

1,080 

1.360 

825 

310 

218 

34,488 

4,080 

70O 

758 

5.620 

1,358 
7.107 
1.010 


6.10,608 

28,566 

4,204 

42.032 
7,506 
2.827 

52,030 


APPENDICES 
EXPORTS  OF  MERCHANDISE  TO  PFHV— Continued 


67 


Artielet 


Wood,  manufacturn  of — Conlinutd, 
Lumber- 
Boards,   planks  and  deals — Cantintud, 

Spruce  (M.  ft.)    

All  other   (M.   ft)    

Railroad  ties  (No.)    

Shocks — 

Box   (No.)    

All  other  (No.)    

Staves  (No.)    

Furniture    

Trimmings,    moldings    and    other    bouse 

finishings     

All  other  manufactures  of    

Wool,  manufactures  of — 

Wearing  apparel   

All  other    

Zinc,   manufactures  of    

All  other  articles  


Quantities 


1013 


142 

160,022 

584,337 

800 

(M.4&4 


Total  domestic  exports 
Foreign  exports,  total    


ToUl 


1»14 


217 

88 

309,700 

240,60.t 

1,000 

43,010 


Value* 


1013 


t2.470 

2,8H.'I 

67,s»:i 

42.702 
2,472 

12.7M 

eo,4.'>4 

l,."Jfi.'. 
6e,4.'>.i 

i,ifli 

1.7N.'i 

1.4S2 

30.070 


$7,325,45.^ 
lfl,44N 


$7,341,003 


1014 


|3,S58 

U.715 

12a,084 

22.021 
4..V>5 
7,&43 

68,201 

236 
S5.100 

1,003 

1,009 

470 

20,014 


t7,ll.'>,.'>14 
2.5.738 


)7,141.2r>2 


The  following  figures  show  the  trade  of   Peru  with  the  United  States 
before  the  war,  and  in  each  month  of  1914  since  the  war :  > 

Exports  to  U.  S.  Imports  from  U.  S. 

Month                                       1913                 1914  1913                 1914 

January-July  $5,852,733        $6,647,515  $4,581,938       $3,847,130 

August    668.439          1,263,275  581,766            500,869 

Septembir    96.'     5            752.873  58<...?20            237,522 

October  1,064^=3           765,531  575,140           387,588 

Novemb  r     1,111,482            999,594  589,274            350,780 

December    1,164.345           841,153  694,478           552,598 

Total  for  year $10,824,587      $11 ,269,941  $7,608,916       $5,876,487 


>  Otto  Wilson :  "  Forecast  of  Trade  with  South  America,"  U.  S.  Bureau 
of  Foreign  and  Domestic  Commerce. 


APPENDIX  B 
Trade  with  Countries  of  the  World 


Country 

Ar^ntina  

Arica 

Australia   

Austria  '. 

Barbados 

Belgium 

Bolivia  

Brazil  .'.'.'.'.".".' 

Canada   

Chile    ■".■.■.■ 

China  ...!...! 

Colombia   '.'.'.'..'!.' 

Costa  Rica  

Cuba    

Denmark  '..'...". 

Ecuador 

France   []\[ 

Germany   

Great  Briuin  ....'.".!." 

Holland  " ' ; ' 

Honduras 

India  

Italy  '.'.'.'.'.'.'. 

Jamaica  

Japan   ..."...'."" 

Martinique   

Mexico    '.'.'... 

Nicaragua  ...'.'.'.'.'.'..'. 

Norway  .!.!!!! 

Panama    '..'.'.'.'.' 

Paraguay  

Portugal 

San  Domingo   ..'.".' 

San  Salvador  '...'..'.". 

San  Thomas  

Spain    "  \ 

Sweden    ..'....'.'.. 

Tacna    .....'.'. 

Trinidad    

United  States   ..'.'.'.'.'.' 6 

Uruguay   " ' '     ' 

Venezuela 

Miscellaneous    


IMPORTS • 


1911 
142,698 


1.116,720 


1,626,494 

5,547 

43,369 

389;799 
»  75.676 


78,109 

62.126 
1.410.009 
4,608,026 
8,375,581 


971,323 

114.731 

39,9^ 


11,486 
1021,561 

3i37,637 


,082„1S2 
12,164 


1912 

$34,054 

6.998 

1,164.251 

685 

131 

1,192.284 

3,849 

14,784 

9'5r.i36 

753,285 

11,591 

22.283 

112,985 

452 

96.189 

1,547,574 

4,521,729 

6,648,368 

209 


1.620 

1^37,876 

1.142 

112.659 


45,042 
248 

'7i66 

117,663 

24>i3 

421,624 


2,576 

841 

5,763.425 

2,707 


1913 
113,263 

6,245 
631.290 

1.293 


1,866,916 

1,327 

19,858 


1,035,554 

769,668 

45.179 

33,014 

158,990 

78 

85.492 

1,363.191 

5,132,038 

7,769225 

45.951 

274,303 
1,236,739 

62,878 

17^77 


7,411 

86.m 

24 

20,747 

355,494 

267 

7,616 

2,255 

8,530,525 

11,168 


^*f4J^T7orHSt?/  ^""-  ^-^^  -""--'"t  of 


one  pound. 


1914 
$9,404 

5,686 
909,150 

1,895 


1,334,537 
16.767 
7.863 


435.543 
639.561 
6.415 
21,540 
127,113 
2265 
55,914 
758,034 
3.144,434 
6,505,363 
112.514 
1.113 
270.969 
979,932 
1.327 
60,565 


U44 
1.171 

25.845 
1.123 

34,973 

'l'9,si3 


303.978 

2294 

2.649 

739 

7.633.719 

7.936 


20,650 


58 


APPENDICES 


EXPORTS 


Country  1911 

Argentina    | 

Arica      ;      ,ig,i5H 

'^us'ra'w    130,189 

Austria  

Barbados    "  j  gg^ 

}j''Ki"m    ;     494.'650 

S°''^|=    730.903 

Brazil    

J-'a'.'ada   .';:      224,368 

,St!'e    6,332,381 

Chin.i    

^°'"'"b;a ■..!.■;;.;:    >6,i86 

Costa  Rica 

Cuba    " 

Denmark    ' ' ' 

Ecuador    j-iii  OQ-i 

France   .'.;.■;  ].r,o_/446 

Cjermany   2,776,766 

ureal   liritani    12,017,921 

Guatemala   ... 

Holland '..■;.'.;    ;;;;;; 

Honduras    . . . 

India    

V*'" '.'.'.'.'.'.'.'.       UMO 

Jamaica   

J?pan  .• '2.262 

Martinique    

Mexico    

Nicaragua  

Norway   

Panama    []',      m,S29 

Paraguay   

Portugal    

San  Domingo .....! 

San  Salvador  

San    Thomas    [ 

Si"»in     299,471 

Tacna    

Trinidad    ...... 

United  States   .10.187997 

Uruguay    119,897 

Venezuela  

Sweden    ...... 

Miscellaneous    


1912 

$1,652 
107,795 


322,3(,9 

558.200 

23MI 


5,157.5.14 

185 

37,884 


3,791 


143,759 

2,7.10,698 

335,495 

15,734.561 

10J06 

13273 

292 


11.849 
'2U 
l.i66 


116.990 


2.916 

58,748 

17.49S'.i76 

114.118 

4,321 


1913 

$7,621 

139,171 

141.326 

5,725 

948 

1,212.555 

6.W,591 

38,501 


5,847.139 

267 

23.906 

471 

180 


241.673 

1.5(>f).495 

2,966,889 

16..S.W,115 


12.743 

'  7.557 
6,682 
'3,365 


55.754 
' ' 'S78 


69 


1914 

$139,740 
181,331 


6,891 

.W),863 

420,317 

5,229 

942,480 

6ZU,200 


39,759 


356,0.14 

742,827 

1,598,804 

15,912,116 


104,665 
29 


49.791 

710 

63 

870 

267 


46,078 
'  '2,.?68 


773 

8.471 

554 

95.047 

11.854 

61,008 

86.814 

680 

199 

14,741,6.19 

14,807.895 

43.021 

15,916 

972 

1,439 

486 

254,581 


507,603 


APPENDIX  C 
Imports  and  Exports* 

Year                                                      Imports  Exports 

1908     $25,850,716  $26,6(kU66 

1909   20.919,268  31,596.583 

1910  243)6.188  34,425,984 

1911    26,484.257  .56.090.095 

1912   25.027.814  45,878,004 

1913    29,591,451  44.409,610 

1914    23.463.740  42.611,459 


•  Otto  Wilson :  "  South  America  as  an  Export  Field,"  U.  S.  Bureau  of 
Foreign  an<l  Domestic  Commerce.  1914. 

PERUVIAN  COMMERCE  (1913)  » 

Items  Total  Trade 

Imports   "$29,631,033 

Exports    '•44,469.011 

Copper   '•  8,188,791 

Cotton  '■  7,615,313 

Sugar '6.874,739 

» Commerce  Reports,  Jan.  2,  1915. 
*'  Figures  include  gold  and  silver. 

'  In  1909,  the  latest  year  of  record,  the  United  States  took  81  per  cent  of 
Peru's  exports  of  copper,  10  per  cent  of  cotton,  and  8  per  cent  of  sugar. 


EXPORTS  OF  PERU* 

The  principal  products  of   Peru  are  minerals,  sugar,  rubber,  cotton   and 
wool,  and  in  1913  were  exported  in  the  following  amounts ; 

Minerals   $18,519,450 

Sugar    7237.500 

Cotton   4,197,750 

Rubber  and  gums  4,825,000 

Wool    2,653,750 

Total  exports    $37,722,950 

•  Otto   Wilson :    "  Forecast    of   Trade    with    South    America,"    Bureau   of 
Foreign  and  Domestic  Commerce,  1915. 

60 


A 


